Area Small Business Owners Upbeat on Local Economy and Looking to Rebuild After Hurricane Harvey
HOUSTON November 14, 2017 – The majority of Houston-area small business owners anticipate a strong finish to 2017, with 87 percent reporting confidence that their year-end revenue will exceed that of 2016, according to the fall 2017 Bank of America Business Advantage Small Business Owner Report, a semiannual survey of 1,000 business owners across the country and in the greater Houston area. The survey was conducted in August and September, with half of the responses registered before Hurricane Harvey and half completed in the weeks following the storm. Confidence in 2017 revenues decreased only slightly among those responding post-hurricane.
Economic optimism is also on the rise, with half of Houston entrepreneurs believing the national economy will improve over the next 12 months, an increase of 20 percentage points year over year. Similarly, 61 percent of Houston small business owners believe their local economy will improve in the year ahead. Other findings indicate Houston small business owners are planning to act on this confidence, with plans to grow, hire and expand at rates above their national peers:
- More than seven in 10 expect their revenue will increase over the next 12 months (20 percentage points higher than the national average).
- Seventy-two percent plan to grow their business over the next five years (vs. 51 percent nationwide).
- Forty-one percent intend to hire new employees in the next 12 months (vs. 16 percent nationwide and highest of all 10 major cities surveyed).
- Twenty-one percent plan to apply for a loan in 2018 (vs. 8 percent nationwide).
“Hope abounds in Houston, where many small businesses are working to rebuild in the aftermath of one the most damaging natural disasters in U.S. history,” said Elizabeth Romero, small business central division executive at Bank of America. “Before Hurricane Harvey, area small businesses were reporting high expectations for their end-of-year revenue. While that sentiment softened in the period following the disaster, overall optimism remained high, as we’ve seen our local business sector show incredible resilience in the initial months of the recovery.”
Concerns over health care, corporate tax rates and interest rates decline
Concern about specific economic factors has held steady or significantly declined since fall 2016. Health care costs continue to be the top economic concern, though at 67 percent, Houston entrepreneurs are less concerned than last fall (81 percent). Other top economic concerns include:
- Commodities prices (53 percent, steady since fall 2016).
- Strength of the U.S. dollar (49 percent, down 5 percentage points since fall 2016).
- Corporate tax rates (47 percent, down 12 percentage points since fall 2016).
- Consumer spending (47 percent, down 5 percentage points since fall 2016).
- Interest rates (47 percent, down 23 percentage points since fall 2016).
Entrepreneurs focus on investing in employees to grow their business
Small business owners in Houston continue to be thoughtful about retaining talent, with three-quarters taking steps within the past year to do so, including offering flexible work hours/location (43 percent), creating employee team-building activities (28 percent) and offering employee perks – such as pets in the workplace (23 percent). Additionally, more than nine in 10 of Houston entrepreneurs provide wage increases and promotions, with most raises given on an unscheduled basis (59 percent) driven by either employee performance or positive business growth. Meanwhile, 20 percent give regular raises every year, regardless of performance.
When asked about the top factors impacting business growth, 68 percent of Houston business owners cited their ability to attract and retain quality employees. Other factors impacting business growth include a positive economic environment (90 percent), customer demand (86 percent) and access to capital (81 percent).
Houston entrepreneurs embrace social media to strengthen relationships, use digital tools to enhance operations
More than half of Houston small business owners say social media has had a positive impact on their business’s bottom line in the past year. The top ways Houston entrepreneurs rely on social media include connecting or networking with peers (70 percent), capturing and responding to customer feedback (67 percent) and researching the marketplace and competitors (66 percent).
While most Houston entrepreneurs believe social media has a positive impact on their business, 43 percent of local small business owners admit to having made a business blunder on mobile or digital channels. Top business blunders among Houston entrepreneurs include outdated online information that caused customer confusion (16 percent) and incorrectly scheduled appointments or meetings (10 percent).
Beyond social media, an overwhelming number of Houston entrepreneurs have adopted digital tools to help manage daily business operations. Ninety percent of entrepreneurs say they use at least one digital tool to run their business, with digital banking (54 percent) and social media marketing tools (45 percent) reported as the most popular solutions.
Houston small business owners look to pay it forward during the holidays
Perhaps due to confidence that 2017 revenues will exceed expectations, 83 percent of Houston entrepreneurs plan to reward their employees with holiday perks, including:
- Office closure during the holidays (47 percent).
- Flexible hours and vacation time (41 percent).
- A holiday party (39 percent).
- Employee gifts (36 percent).
- Salary bonuses (30 percent).
Additionally, 78 percent of local business owners plan to participate in charitable efforts this holiday season, such as making financial contributions to charities or nonprofits (40 percent), organizing a team volunteer effort at a local charity or nonprofit (28 percent) and organizing charitable giving programs for employees (24 percent).
For a complete, in-depth look at the insights of the nation’s small business owners, read the fall 2017 Bank of America Business Advantage Small Business Owner Report, and for additional insights, download the Small Business Owner Report infographic here. A local snapshot can also be viewed here.
Bank of America Business Advantage Small Business Owner Report
GfK Public Communications & Social Science conducted the Bank of America Business Advantage Small Business Owner Report survey for fall of 2017 online between August 8 and September 28, 2017 using a pre-recruited online sample of small business owners. GfK contacted a national sample of 1,013 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 ten target markets: Atlanta, Boston, Chicago, Dallas/Fort Worth, Houston, Los Angeles, New York, Miami, San Francisco and Washington, D.C. Approximately 150 interviews each were also completed among respondents in the tech and medical/health care field. 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 47 million consumer and small business relationships with approximately 4,500 retail financial centers, approximately 16,000 ATMs, and award-winning digital banking with approximately 34 million active users, including approximately 24 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 in all 50 states, the District of Columbia, the U.S. Virgin Islands, Puerto Rico and more than 35 countries. Bank of America Corporation stock (NYSE: BAC) is listed on the New York Stock Exchange.
SOURCE: Bank of America