San Francisco Small Business Owners Hedge Expansion Plans as Competition for Talent Intensifies
Entrepreneurs Anticipate Revenue Growth, but Declining Economic Confidence and Competitive Job Market Give Pause to 2019 Planning
While a majority of local small business owners anticipate year-over-year revenue growth, San Francisco entrepreneurs are tempering their 2019 expansion plans in the face of declining economic confidence and an increasingly competitive hiring environment, according to the fall 2018 Bank of America Business Advantage Small Business Owner Report.
The report, based on a semiannual survey of 1,000 small business owners across the country and the greater San Francisco area, revealed that 87 percent of San Francisco business owners are confident their year-end revenue will exceed that of 2017. In addition, over the next 12 months:
- Sixty-three percent of San Francisco business owners believe their revenue will increase (vs. 66 percent in fall 2017).
- Seventy-two percent plan to expand (vs. 81 percent in fall 2017).
- Twenty-eight percent plan to hire (vs. 30 percent in fall 2017).
- Forty-eight percent are confident the San Francisco economy will improve (vs. 59 percent in fall 2017).
- Forty percent expressed similar confidence in the national economy (vs. 41 percent in fall 2017, and the lowest level of confidence observed among entrepreneurs in 10 major cities nationwide).
“San Francisco business owners are continuing to seek growth but have tempered their economic expectations and are proceeding with caution,” said Emily Shanks, small business northwest division executive at Bank of America. “Hiring plans remain in line with the national average, but the current market environment presents an almost unparalleled struggle when it comes to recruiting and retaining talent.”
Heightened competition for San Francisco small business talent
San Francisco business owners acknowledge that identifying and retaining employees has become a significant challenge. In the last year, turnover affected 29 percent of San Francisco entrepreneurs. Among business owners who sought to hire new employees, 55 percent say they had difficulty finding qualified candidates, in large part due to the tightening job market.
To adjust to these challenges, business owners have modified their hiring strategies to find and recruit top talent by:
- Shifting to a more flexible culture in terms of hours, location and extra time off (28 percent).
- Using social media more actively (21 percent).
- Offering higher salaries (18 percent).
When it comes to the top characteristics San Francisco business owners are looking for in their potential job candidates, entrepreneurs primarily value integrity (57 percent), previous work experience (54 percent) and passion for the work (44 percent).
Concern for most economic issues holds steady; worry over corporate tax rates, compliance with government regulations dip
The survey found a general trend of steady concern over most economic factors that are tracked. Health care costs remain at the top of the list of economic concerns in San Francisco, dropping four percentage points year-over-year to 65 percent. Concern over corporate taxes also decreased significantly, with only 41 percent identifying this as a burdensome issue nearly a year after the enactment of U.S. tax reform, down from 47 percent in fall 2017.
Perhaps a result of recent changes to and uncertainty about trade policies, 52 percent of San Francisco business owners identify U.S. trade policy as an economic concern. Forty-three percent say the latest tariffs/U.S. trade policies have impacted their businesses, with 17 percent reporting a negative impact, 16 percent reporting a positive impact and 9 percent reporting both positive and negative effects.
San Francisco entrepreneurs feel the holiday spirit; recommend entrepreneurship as a career path
On a positive note, San Francisco business owners are feeling the holiday spirit as 82 percent plan to offer at least one holiday perk to their employees. The top holiday perks being offered are office closures (43 percent), flexible hours or vacation time (43 percent), employee gifts (37 percent) and salary bonuses (30 percent). Finally, despite unique challenges in managing a small business, San Francisco entrepreneurs love what they do. Eighty-six percent say the added stress of entrepreneurship has been worth it, and 86 percent would recommend that others follow in their footsteps.
For a complete, in-depth look at the insights of the nation’s small business owners, read the and for additional insights, download the .
Bank of America Business Advantage Small Business Owner Report
GfK Social and Strategic Research conducted the Bank of America Small Business Owner Report Survey for fall 2018 online between August 30 and September 13, 2018, using a pre-recruited online sample of small business owners. GfK contacted a national sample of 1,067 small business owners in the United States with annual revenue between $100,000 and $4,999,999 and employing between two and 99 employees. In addition, a total of approximately 300 small business owners were also surveyed in each of 10 target markets: Atlanta, Boston, Chicago, Dallas, Houston, Los Angeles, Miami, New York, San Francisco, and Washington, D.C. The final results were weighted to national benchmark standards for size, revenue and region.
Prior to 2016, previous waves of the Small Business Owner Report Survey were conducted by telephone and while best efforts were made to replicate processes, differences in sample, weighting and method suggests caution when making direct statistical comparisons of the results from pre-2016 and post-2016.
Bank of America
Bank of America is one of the world’s leading financial institutions, serving individual consumers, small and middle-market businesses and large corporations with a full range of banking, investing, asset management and other financial and risk management products and services. The company provides unmatched convenience in the United States, serving approximately 67 million consumer and small business clients with approximately 4,400 retail financial centers, approximately 16,100 ATMs, and award-winning digital banking with more than 36 million active users, including nearly 26 million mobile users. Bank of America is a global leader in wealth management, corporate and investment banking and trading across a broad range of asset classes, serving corporations, governments, institutions and individuals around the world. Bank of America offers industry-leading support to approximately 3 million small business owners through a suite of innovative, easy-to-use online products and services. The company serves clients through operations across the United States, its territories and more than 35 countries. Bank of America Corporation stock (NYSE: BAC) is listed on the New York Stock Exchange.
Reporters May Contact:
Colleen Haggerty, Bank of America, 213.621.7414