MCLEAN, Va., April 3, 2019 /PRNewswire/ -- Two-thirds (66
percent) of small business owners (SBOs) say recent fluctuations in
the stock market have not changed their business outlook, according
to Capital One's (NYSE: COF) latest Small Business Growth Index, a
biannual survey of 500 small business owners (SBOs) gauging
sentiment related to the economy, business conditions and plans for
growth. At the same time, nearly half (49 percent) of SBOs are
concerned that a recession could impact the overall success of
their company in the next year.
"Small business owners remain cautiously optimistic," said
Jenn Flynn, head of small business
bank at Capital One. "While we saw a slight dip in optimism
compared to Fall 2018, small business owners are still making
strategic investments in their businesses, while paying close
attention to the uncertainty in the stock market and evaluating the
potential impact of a recession."
Following are key themes uncovered by the Spring 2019 Small
Business Growth Index:
Small business owners think stock market volatility will
impact their business, but many have yet to feel the
effect.
- Many SBOs are preparing for the impact of future stock market
volatility: 49 percent are or will be more conservative when it
comes to inventory or supply management, 36 percent say it has or
might decrease their sales, and 34 percent say it has or might
impact their ability to expand and grow their business.
Additionally, 27 percent say they are not or may not be able to
hire new employees.
- However, the fluctuations in the stock market have not changed
the outlook of 66 percent of business owners. Additionally, 40
percent of SBOs report an increase in sales over the past six
months.
- Since last fall, optimism has dropped eight percentage points,
with 59 percent of SBOs saying business conditions are good or
excellent, down from 67 percent in October
2018.
The economy and a tight labor market are impacting small
businesses' ability to hire, while those who plan to hire are
competing for talent with their pocketbooks.
- Twenty-nine percent of SBOs plan to hire in the next 6 months,
down from 33 percent in Fall 2018. Sixty-six percent of these new
hires will be full-time employees.
- Of SBOs who do not plan to hire, 29 percent say they would like
to but are nervous to take on the added expense due to economic
conditions, while 28 percent say they cannot find the right talent,
and 24 percent say they don't have the financial resources to do
so.
- The majority of SBOs are competing for talent with their
pocketbooks, with 76 percent of those who plan on hiring in the
next 6 months noting they are providing industry leading or
competitive salaries. Forty-seven percent say they are providing
more benefits to employees and 43 percent say they are marketing
their business as a great place to work. Only 35 percent say they
are investing in differentiated or modern office perks, and 29
percent say they are providing an option for flexible work
environments.
- A third (34 percent) of business owners have leveraged the gig
economy for their business, and 19 percent say that it has helped
them get work done in a tight labor market.
Half of the respondents feel the tax plan has been generally
positive for small businesses, yet many feel they will actually pay
more in taxes.
- Half (51 percent) of SBOs say the tax plan has been positive
for small business. Male business owners are more likely to say the
plan has been positive for small business (57 percent), compared to
41 percent of female business owners who say it has been
helpful.
- Twenty-one percent of SBOs expect to pay more in taxes this
year, up from 19 percent who expected to pay more in Fall 2018 and
11 percent one year ago. Fifty-three percent of business owners
think they will pay about the same.
Business owners are split on how they'll be impacted by
artificial intelligence and machine learning
- More than half (53 percent) of SBOs with $1 to $10 million
in revenue believe artificial intelligence (AI) and machine
learning is already impacting or will impact their industry.
Additionally, 48 percent of SBOs with $1 to $10 million
in revenue are concerned about their ability to hire the right tech
talent to help advance their business into the future.
- However, most business owners with $1 to $10 million
in revenue do not think that some of their employees' roles will be
replaced by AI and Machine Learning-based technologies. Only 8
percent feel that some of their employees' roles will be replaced
in the next five years, and 19 percent feel that some of the roles
will be replaced in ten years.
- Only a quarter (23 percent) of all SBOs feel pressure to change
aspects of their business, like customer experience, based on
industry innovation driven by large companies like Amazon.
"Change is a constant for small business owners, and it's
encouraging to see leaders remain resilient as they interpret
new things like tax reform and the impact of technology," said
Brad Jiulianti, head of small
business card at Capital One. "We look forward to seeing how
business owners continue to innovate to meet the changing needs of
today's marketplace."
Survey Methodology
Capital One's Spring 2019 Small
Business Growth Index Survey was conducted by the market research
and business intelligence firm Engine (formerly ORC International).
For this telephone study, Engine interviewed a national sample of
500 for-profit small businesses in the U.S. Small businesses are
defined as those with a total annual revenue less than $10 million. Interviews were conducted from
February 4-25, 2019. One respondent
per business was interviewed. The margin of error is +/- 4.38
percentage points at a 95% confidence level.
Engine also interviewed a national sample of 200 for-profit
small businesses in the U.S. These small businesses are defined as
those with a total annual revenue of $1
million to $10 million.
Interviews were conducted from February 26-
March 11, 2019. One respondent per business was interviewed.
The margin of error is +/- 6.93 percentage points at a 95%
confidence level.
About Capital One Spark Business
Capital One® offers a
broad spectrum of financial products and services to consumers,
small businesses, and commercial clients. Spark Business® from
Capital One offers a diverse suite of financial products, tools and
services designed specifically for small businesses, including
credit cards with unlimited rewards, banking products and
services and Business CreditWise℠, a free business credit
report tool. Today, Spark Business works to address the unique
needs of millions of business owners across the U.S., so they can
focus on what they are most passionate about – running and growing
their business.
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SOURCE Capital One