Small business owners are optimistic
Small business owners are optimistic about the future of the economy. That’s the gist of a new Bank of America survey released last week. The first of its kind, the survey included some 1,000 small business owners.
“The overarching theme here is despite of all the stress and challenges, small business owners in this country are confident folks and feeling pretty good about the near term future of their business,” said Robb Hilson, a small business executive with Bank of America. “Optimism has improved over the last several quarters.”
Though the survey found that small business owners feel confident about their local economies, they feel less confident about national leadership, which is unsurprising given the upcoming election and the shaky economic recovery.
According to the survey, talent retention ranked as the biggest concern for small business owners. Of the companies surveyed, 44 percent did not offer a benefits package, and Hilson cited the need for employee retirement plans to help retain talent and avoid losing workers to larger firms and companies. That jibes with another recent study Reuters covered about a crisis in employee retirement planning among African-American owned businesses.
Aside from retirement planning, the survey also found that cash flow problems, though helped by debt collection technologies like mobile payment platforms, were another point of stress for small business owners.
To read the full Bank of America survey, click here.
Image: U.S. President Barack Obama talks with small business owners to discuss income tax credits during a roundtable discussion at Taylor Gourmet restaurant in Washington, May 16, 2012. REUTERS/Larry Downing
Small businesses hiring more online workers
When Casey McConnell started text messaging marketing company Qittle he took the traditional route of hiring onsite employees. But he soon realized it was more advantageous to hire workers online.
“We found it was easy to find these specialists or people that we could hire for a certain amount,” said McConnell, the CEO of Qittle. “We didn’t have the extra overhead and we just got the project done. It’s really easy for us to ramp up our needs or pull back using contractors. If we had an internal staff it’s pretty hard to fluctuate like that.”
Qittle’s preference to hire workers in the cloud is reflected in Elance’s recent survey that shows 83 percent of small businesses plan to hire half their workers online within the next 12 months. Only 10 percent of those surveyed plan to hire predominantly onsite workers (90 percent).
Elance, a marketplace for online workers, has posted more than 600,000 jobs ranging from programers to virtual assistants. Small businesses prefer to hire online because of flexibility, speed and economy of the process cost, according to Fabio Rosati, the CEO of Elance.
“So if you’re a small business owner, you can think of a hybrid model of hiring (online and onsite workers),” said Rosati. “You can think about what skills and what talent you need onsite. You can also decide what skill set you need to be in the cloud which is much more cost-effective and much more flexible.”
Elance’s Online Employment Report shows the number of businesses hiring online has increased 107 percent since last year. Elancers earned 51 percent more last year and earned a record $38 million in Q3 2011.
Rosati said more and more companies will decide to hire in the cloud. “I predict that at some point 99 percent of businesses will have between 5-10 percent of their hiring done online because it makes so much sense.”
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What your area code says about your business
The choice of area code carries more weight in consumer perception than zip code, according to more than 70 percent of small companies polled in a survey conducted by communications and messaging service company j2 Global Communications Inc.
Nearly the same percentage of business owners said having the right phone number gives them a competitive edge.
“Reinforcing that you’re the right person to be working with, building that credibility is the most important thing (owners) have in building a small business,” said Mike Pugh, j2′s vice president of marketing communications, adding that a San Francisco area code was more likely to be seen as optimal for tech startups, while a Detroit number would be preferable for someone in the automotive industry.
“They really just have the impression they can make,” Pugh said, noting small businesses with 800 numbers and preferred area codes said they are more likely to project an image of greater scale and prestige to their customers. “Having the right phone number really just helps with that impression.”
As Internet and mobile communications take on greater importance in business services, physical presence such as the leasing of expensive real estate diminishes, according to the survey. It found only 8 percent of respondents said location was the most important factor in business image.
J2, parent of the eVoice virtual phone service, said more than 300 random participants among their customer base and visitors to their website responded to the survey, which was available in all 50 states.
Fewer small businesses taking summer vacation
– Robin Enos is a contributor to FindLaw’s Free Enterprise blog. FindLaw is a Thomson Reuters publication. –
We’ve written about how small businesses don’t really have a legal obligation to give employees paid vacation time. But what about the owner’s small business vacation time?
You’d think owner vacation time would rank low on small business owners’ priority list. And you would be right. A majority (59 percent) took no vacation last summer, says a report released by American Express.
But the reason isn’t simply profit maximization.
A large majority (79 percent) of small business owners do not feel guilty for taking a vacation, reports the AmEx survey of 500 small business owners.
But other reasons not to get away loom large:
- Busy work schedules (37 percent) and affordability (29 percent) affect some owners’ hesitancy to take a vacation this summer.
- Entrepreneurs are less plugged in than they were in 2008, but 68 percent still check in every day while on vacation, and 18 percent say they check in several times a day.
- Rising gasoline costs will affect half of small business owners’ vacation plans, keeping them closer to home or staying home altogether.
- The uncertain economy is affecting 57 percent of small business owners’ vacation plans. Still, 46 percent of small business owners surveyed say they will take a summer vacation this year.
Small business seen emerging from “foxhole”
An improved economic outlook has many small business owners looking to grow now to gain a leg up on their competition.
Nearly half (47 percent) of the owners polled in a recent survey by office equipment maker Brother International Corp said they were willing to spend rather than stockpile cash reserves – an increase of 11 percent over 2010, when they were still facing recessionary pressures.
“They know they can’t stand pat, they can’t stay in the foxhole,” said John Wandishin, vice president of marketing for Brother. “When the clouds start moving and the sun starts coming out, how are they going to be positioned?”
At the same time, small business owners are experiencing stress levels relatively unchanged from a year ago, with more than half indicating their worry is higher than usual, according to the survey, which included 501 interviews.
“There is still uncertainty out there,” said Wandishin, noting troubling headlines about unrest in the Middle East and higher gas prices.
Keeping up with policy changes in Washington appears to be contributing to business owners’ anxiety. Forty percent of respondents said following trends in state and federal policy is more difficult than bringing in new customers, according to the survey, which was conducted in late January by Wakefield Research.
“When they get mixed signals or no signals, that has a negative impact,” Wandishin said.
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Citibank: Small business cautiously optimistic
Small business owners are showing increased confidence in the economic recovery, but they’re still not willing to pull the trigger on hiring new workers, according to a new survey by Citibank.
“Optimism is definitely up,” said Raj Seshadri, who heads Citi’s small business banking division. “We’re not out of the woods. They’re worried about costs, particularly the cost of healthcare, the cost of raw materials – how they’re going to manage through the increasing cost of running their business.”
The majority of owners said they believe 2011 will be better (44 percent) or the same (42 percent) than 2010, while just 15 percent expect it to be worse, according to the poll. It included a random sample of 1,002 small businesses throughout the country with revenue in excess of $100,000.
Even so, 78 percent of those surveyed are not yet ready to increase staffing levels, holding out for improved sales in a competitive environment where most are resistant to boosting the prices of their goods and services.
“The bottom line is that sales have to recover,” Seshadri said. “Then they’ll be more comfortable thinking about expansion plans as opposed to maintenance plans.”
Despite the cautious optimism, the overwhelming majority of small business owners – some 73 percent – said they would start their business again, despite broader challenges in the economy. Some 64 percent said they would recommend entrepreneurship as a career choice for their kids, up from 59 percent in September.
“These guys are fundamentally passionate about small business ownership,” Seshadri said.
Small businesses cheer midterm results
– George A. Cloutier is the founder and CEO of American Management Services and the author of the bestselling book, “Profits Aren’t Everything, They’re the Only Thing”. The views expressed are his own. –
Last week’s midterm elections have provided an emotional boost for many small businesses, according to a survey conducted by American Management Services.
About 73 percent of small business owners said they felt more optimistic about the future of their company due to the Republican gains, in a survey of more than 300 small business owners in 25 states following the Congressional elections. The participating companies all employ at least 25 employees and are considered the job-drivers most likely to hire new workers.
Still despite their optimism, just 5 percent said they were considering hiring more workers based on the election results and 64 percent were not planning on adding additional workers at this time – debunking some claims that small business would step up hiring quickly with a new and clear political direction.
Twenty-six percent did indicate they might hire, but are waiting to see if business actually improves.
One St. Louis, Missouri-area business owner stated it succinctly: “I’m from the ‘Show Me’ state and until I see real new business orders, I’m not making a $50,000 bet on a new employee.”
The prospect of potentially lower taxes, enacted job credits and payroll tax holidays does not seem to be having significant effect. Another owner from Houston, Texas stated: “If there is a payroll tax holiday and I save only $5,000 to spend $30,000 to $50,000 per employee, what’s the point of having them sit around doing little or nothing?”
What exactly will Republicans in Congress do to help small businesses? I own one, and I see nothing in their plans, other than the typical three lines of rhetoric. When they do something positive that affects small business, will somebody let us small business owners know?
Exclusive: Survey says small businesses upbeat about 2011
Small businesses are feeling better about the economy and are looking to grow in 2011, according to a new survey released this week by online marketing firm Constant Contact.
Of the more than 1,400 small business owners that responded to the survey (view full results), 73 percent expected their companies to grow over the next 12 months and nearly 40 percent felt “positive” about the economy over the course of the next year.
“They see the darkness behind them and looking forward they see some light,” said Eric Groves, Constant Contact’s senior vice president of global market development. He added the survey is a “followup” to the Waltham, Massachusetts-based company’s larger spring polling of roughly 4,000 small businesses. Groves said Constant Contact has more than 400,000 clients, predominantly small to medium-sized businesses.
Another key finding was that small businesses remained disenchanted with the Obama administration’s efforts to help, with a combined 51 percent of respondents rating the federal government’s attitude toward small businesses as “very unsupportive” (28.7 percent) or “moderately unsupportive” (22.6 percent).
“They’re looking at this as something they’re going to have to figure out themselves,” said Groves on the challenge respondents face in growing their businesses in a slow economy.
More than 70 percent of small businesses said they had not sought financing in the last 12 months. Of those that did secure financing, just 12 percent said they obtained a loan from the U.S. Small Business Administration – the prime government lending arm to small firms. In order, the most popular targets for funding were: banks (50 percent), family and friends (23 percent), angel or venture investors (13 percent) and Community Development Financing Institutions (CDFIs) at a mere 2 percent.
While 55 percent said they expected to enjoy moderate growth, just 35 percent said they would be hiring over the next year.
Big banks not so popular among small businesses
A new study showed the big U.S. banks have some work to do to if they want to improve their image among small and mid-sized businesses.
The annual report, released by Portfolio.com and based on research conducted by American City Business Journals (ACBJ), surveyed 1,762 business owners, CEOs and presidents of companies with more than one employee and asked them to rank 207 brand-name companies, from the technology, telecom, travel, financial and media sectors, on a set of seven different attributes.
Among banks and financial services firms trust remained the biggest issue for the small business owners polled, said Godfrey Phillips, vice president for research at ACBJ.
“Small businesses care about whether the bank they deal with is ethical,” said Phillips, who noted U.S. Bank was voted the top bank brand, but was No. 109 among companies on the overall list. Both Citibank and Bank of America plummeted due to negative publicity. “The bigger the bank, the more it got hit. Regional banks and local banks in our survey did well, just because that’s where people have their relationship with and they weren’t in the news. When you’re in the news you drop substantially.”
Another interesting finding, noted Phillips, was the emergence of online brokerage firms such as TDAmeritrade and E*Trade, which both placed in the top three among financial services firms.
“Another area where we really saw a big jump on was that people started to manage their money more so than before,” said Phillips, adding it was emblematic of the wider trend of people moving away from full-service brokerage firms. “And their perceptions of themselves as investors had substantially improved, because they just started to be more involved in how they handled their money.”
The survey polled entrepreneurs with more then $250,000 in investable assets. Phillips said the poll is the only business-to-business survey as opposed to business-to-consumer polls.
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Small Talk: Not out of the woods yet
These days everybody is talking about a financial recovery, but a new Wells Fargo and Gallup study shows small business owners remain skittish.
Even with the recent positive news that the jobless rate had dropped from 10 to 9.7 percent, the study – conducted on January 22 – showed virtually no change in small business optimism from the last report in October.
The Wells Fargo/Gallup Small Business Index optimism score came in at -16, which was down one point from October 2009 and reflects an overall negative outlook by small business owners on their companies. A zero score would indicate that small business owners have a neutral opinion about their outlook.
The report is compiled from telephone interviews with 605 U.S. small business owners and the results are tabulated from a formula that scores and sums the answers to 12 questions – six about the present situation and six about the future. Respondents were asked about their financial situation, cash flow, revenues, capital allocation spending, job hiring and credit availability.
Even last month’s U.S. Commerce Department report that showed 2009 fourth quarter Gross Domestic Product grew at the fastest pace in six years, was not enough to brighten the spirits of small business owners, of which 42 percent said their cash flow was somewhat poor or very poor for the last 12 months, up from 36 percent during the last quarter.
The news wasn’t all bad, as the Wells Fargo poll showed 48 percent of business owners expect an increase in revenue in the next year, up from 42 percent and 24 percent expect their spending to increase in 2010, compared to 19 percent during Q4 2009.
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