Small Businesses Look to Expand, While Competition for Talent Intensifies
With Rising Revenues and Economic Confidence High, More Small Businesses Look to Hire Amid Tightening Job Market
The U.S. small business sector looks to end 2018 on a high note, with most entrepreneurs reporting anticipated year-over-year revenue growth and more indicating plans to hire and expand in 2019, according to the fall 2018 Bank of America Business Advantage Small Business Owner Report. While the majority of small business owners are pleased with the direction of the economy, they say they are confronted with a different type of challenge – finding qualified talent in one of the hottest job markets in half a century.
The report, based on a semiannual survey of 1,000 small business owners across the country, reveals that 80 percent of entrepreneurs are confident their 2018 year-end revenue will exceed that of 2017. Several business growth indicators are also up year-over-year, including revenue expectations and expansion and hiring plans – which have peaked to their highest levels in three years. In addition, over the next 12 months:
- Fifty-seven percent of business owners believe their revenue will increase (vs. 51 percent in fall 2017).
- Sixty-seven percent plan to expand (vs. 59 percent in fall 2017).
- Twenty-seven percent plan to hire (vs. 16 percent in fall 2017).
- Fifty-five percent are confident the national economy will improve (vs. 46 percent in fall 2017).
- Fifty-four percent express similar confidence in their local economies (vs. 48 percent in fall 2017).
- Fifteen percent intend to apply for a loan (vs. 8 percent in fall 2017).
“Small business owners are eager to expand their businesses and take advantage of a healthy economy,” said Sharon Miller, head of small business, Bank of America. “While we are seeing an increase in hiring plans and loan applications, today’s competitive job market has created a challenging environment to attract and retain small business talent.”
Heightened competition for talent as small business hiring ramps up
As business owners make plans to hire in the year ahead, they acknowledge that identifying and retaining employees has become a significant challenge. In the last year, turnover affected 24 percent of all small businesses – with 11 percent losing 10 percent or more of their entire workforce. Among business owners who sought to hire new employees, 50 percent say the tightening labor market had a direct impact on their ability to find and hire qualified candidates.
Adapting 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 (25 percent).
- Using social media more actively (23 percent).
- Offering higher salaries (17 percent).
- Promoting how the business impacts the local community and highlighting charitable work (12 percent).
- Using an outside recruiter (9 percent).
When it comes to the top characteristics business owners are looking for in their potential job candidates, entrepreneurs are twice as likely to value integrity (60 percent) than education (30 percent). Other top characteristics include previous work experience (53 percent), passion for the work and mission of the business (46 percent), and the ability to learn new skills (41 percent).
Health care costs, interest rates and U.S. trade policies top entrepreneurs’ economic concerns
In line with the increased optimism business owners expressed regarding their economic and business outlook, they also expressed lower levels of concern about a variety of economic factors that impact their business. The top economic issues concerning business owners are:
- Health care costs (63 percent vs. 72 percent in fall 2017).
- Interest rates (44 percent vs. 43 percent in fall 2017).
- Trade policies (43 percent; issue not surveyed in 2017).
When considering trade specifically, 36 percent of business owners say the latest tariffs/U.S. trade policies have impacted their businesses, with 17 percent reporting a negative impact, 11 percent reporting both positive and negative effects, and 8 percent reporting a positive impact.
Business owners feel the holiday spirit; recommend entrepreneurship as a career path
Business owners are feeling the holiday spirit, as 83 percent plan to offer at least one holiday perk to their employees. The top holiday perks being offered are office closures (50 percent), flexible hours or vacation time (41 percent) and salary bonuses (38 percent). Finally, despite unique challenges in managing a small business, entrepreneurs love what they do. Ninety-one percent say the added stress of entrepreneurship has been worth it, and 90 percent would recommend others follow in their footsteps.
For a complete, in-depth look at the insights of the nation’s small business owners, read the fall 2018 Bank of America Business Advantage Small Business Owner Report. For additional insights, download the Small Business Owner Report infographic.
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 pre-2016 and post-2016 results.
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:
Don Vecchiarello, Bank of America, 1.980.387.4899