Despite Lingering Economic Concerns, Local
Entrepreneurs Plan for a Robust 2016
Small business owners in the Bay Area are overwhelmingly
optimistic, according to the fall 2015 Bank of America Small
Business Owner Report, a semi-annual study exploring the concerns,
aspirations and perspectives of small business owners in San
Francisco and around the country.
Sixty-four percent of Bay Area small businesses plan to hire in
the coming year, an increase from 42 percent a year ago.
Additionally, 77 percent of area businesses plan to grow their
business over the next five years, a 16 percentage point spike from
last year, and 71 percent are confident their revenue will increase
in the coming year, a 17 percentage point jump from a year ago.
“Bay Area small business owners are growing in innovative ways,”
said Emily Shanks, West Coast small business regional executive at
Bank of America. “They are continuing to evolve their businesses
and are an exemplary market when it comes to collaborative
workplace cultures.”
Not surprisingly, this expected growth demands more capital.
More than one-third (37 percent) of San Francisco small business
owners plan to apply for a loan in 2016, a significant increase
from 10 percent one year ago. When asked about how they would use
this capital, 62 percent of business owners said they will use it
to invest in new equipment (compared to 52 percent in fall 2014),
and 62 percent will invest in employee training and development –
an impressive 40 percentage point jump since fall 2014. As a tech
startup hub, Bay Area small business owners are more likely to
obtain this funding through alternative lending sources (35
percent), compared to 32 percent nationally.
Economic confidence on the rise, despite lingering
concernsIn addition to confidence in their businesses, Bay Area
small business owners have increased confidence in the economy:
Two-thirds (66 percent) believe the local economy will improve in
the next year, an increase of 10 percentage points from a year ago
and the highest since the inception of the survey in 2012.
Fifty-seven percent also predict the national economy will improve
(versus 46 percent a year ago and 36 percent three years ago).
Skepticism remains higher on the performance of the global economy
with 43 percent saying it will improve.
When asked about their top concerns, San Francisco small
business owners believe the following factors have the potential to
impact their business over the next 12 months:
- The possibility of future interest rate
hikes (43 percent).
- The upcoming U.S. presidential election
(43 percent).
- The possibility of a rising minimum
wage (43 percent).
- Financial crises in countries abroad
[i.e., China and Greece] (41 percent).
Bay Area small business owners embrace workplace 2.0The
workplace culture among San Francisco small businesses is
collaborative, tech-friendly and flexible. Most small business
owners (91 percent) say that changing technology has helped their
business. In addition, 86 percent of San Francisco small business
owners say they are willing to adopt new technologies, with many
having incorporated new technologies into their business practices
over the past five years, including website optimization (50
percent) and new payment systems (48 percent).
Collaboration is key, with half (50 percent) saying their
workplace has become more focused on teamwork in recent years, the
highest of all nine markets surveyed. This collaboration is
happening even as employers are offering employees more
flexibility: 54 percent of Bay Area small business owners give
their employees the option to telecommute – a benefit that more
than half (59 percent) say improves employee attitudes at work.
Even though 43 percent of small business owners say that
technology has reduced their need for employees, hiring remains
strong, indicating the nature of the work is changing and they may
be hiring employees that more directly contribute to business
growth.
Small business owners are beginning to offer nontraditional
perks as well, including areas to relax and unwind, such as nap
pods or game rooms (22 percent), office happy hours (22 percent) or
the ability to bring pets to work (15 percent).
Sharing economy, cybersecurity raise concernsSmall
business owners in San Francisco are split on the sharing economy,
an industry in which businesses organize and profit from the
sharing rather than owning of goods and services – from bikes to
Wi-Fi. One-quarter (25 percent) say it’s a benefit, while the same
number say it’s a threat; this is higher than any other market
surveyed.
San Francisco small business owners are more likely than their
national counterparts to have been a victim of a cybersecurity
breach (20 percent, versus 12 percent nationally). Despite 67
percent upgrading their technology once a year or more, local
business owners are also less likely to say they feel prepared for
such a breach (56 percent, versus 66 percent nationally).
San Francisco entrepreneurs looking forward to a successful
year-endBay Area small business owners expect to end the year
on a high note: 82 percent say it is likely they will hit their
year-end revenue goal. Additionally, many small business owners
intend to offer year-end perks to their employees including salary
bonuses (53 percent), flexible hours or vacation time (51 percent)
or a holiday party (45 percent).
When it comes to holiday milestones, the majority of local
business owners continue to state that Black Friday and Cyber
Monday have no impact on their business’ bottom line, but they are
becoming stronger revenue drivers for some. Forty-five percent of
San Francisco small business owners say Black Friday has an impact
on their business’ bottom line – an 18 percentage point jump from
one year ago. Similarly, 43 percent of small business owners
reported that Cyber Monday has an impact on their businesses’
bottom line, compared to 17 percent in fall 2014.
For an in-depth look at the attributes of the nation’s small
business owners, read the full fall 2015 Bank of America Small
Business Owner Report, and for additional insights from small
business owners in San Francisco and across the country, download
the Small Business Owner Report local insights infographic
here.
About the Bank of America Small Business Owner ReportBraun
Research, Inc. conducted the Bank of America Small Business Owner
Report survey by phone from August 21 through September 22, 2015,
on behalf of Bank of America. Braun contacted a nationally
representative sample of 1,001 small business owners in the United
States with annual revenue between $100,000 and $4,999,999 and
employing between 2 and 99 employees. In addition, 300 small
business owners were surveyed in each of nine target markets: Los
Angeles, Dallas, Washington, D.C., New York, Boston, Chicago, San
Francisco, Atlanta and Miami. The margin of error for the national
sample is +/- 3.1 percent; the margin of error for the oversampled
markets is +/- 5.7 percent, reported at a 95 percent confidence
level.
The Braun Research survey results conducted on behalf and for
the exclusive use of Bank of America and interpretations in this
release are not intended, nor implied, to be a substitute for the
professional advice received from a qualified accountant, attorney
or financial advisor. Always seek the advice of an accountant,
attorney or financial advisor with any questions you may have
regarding the decisions you undertake as a result of reviewing the
information contained herein. Nothing in this report should be
construed as either advice or legal opinion.
Bank of AmericaBank 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 4,700 retail financial centers, approximately 16,100
ATMs, and award-winning online banking with 32 million active users
and more than 18 million mobile users. Bank of America is among the
world's leading wealth management companies and is a global leader
in 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.
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