Small business owners have more confidence in their local economy than the national economy, according to the inaugural Bank of America Small Business Owner Report, a semi-annual study exploring the concerns, aspirations and perspectives of small business owners across the country. When asked about the next 12 months, 42 percent expects their own local economic conditions to improve compared to 35 percent who expects the national economy will improve.
The survey also found managing the ongoing success of their business creates more stress for small business owners than any other aspect of their lives.
Maintaining a small business causes small business owners twice as much stress as maintaining a healthy relationship with a spouse or partner, nearly three times as much stress as raising children and more than four times as much as managing their own personal finances.
In addition, small business owners regularly forego free time (57 percent), exercise (37 percent) and other important personal priorities to manage their businesses.
However, reservations about the state of the national economy did not dampen optimism among small business owners regarding their future business prospects. Nearly seven of 10 small business owners view their local economies as very important to their businesses’ success.
The survey also included an oversampling of small business owners in select metropolitan areas. Half of Metro New York small business owners are confident their local economy will improve in the next 12 months, while only four in 10 are confident in the improvement of the national economy during the same period.
Close to four in 10 Chicago small business owners are confident that their local economy will improve over the next 12 months, slightly higher than the 32 percent that are confident the national economy will improve during the same period
Small business owners in Boston, Atlanta, San Francisco, Los Angeles, Dallas and Washington, D.C., all reported more confidence in local markets than the national economy. Miami respondents had slightly more confidence in the national economy (37 percent) than the local market (35 percent).
The majority of respondents (53 percent) stated that their own decisions, rather than the overall health of the economy, are more likely to influence business outcomes. This sentiment was particularly strong among young small business owners, those between the ages of 18 and 34 (66 percent).
Confidence was further evident in two key indicators of performance – hiring and revenue expectations. Nearly one-third of small business owners expect to expand their workforce in the next 12 months, while more than half plan to keep their staffing levels consistent year over year.
Among those small businesses planning to hire, owners expect to increase the number of employees by 25 percent on average. Furthermore, 61 percent of all respondents forecast a revenue increase, and 32 percent projects that revenues will remain the same.
When considering the potential impact of national economic issues, survey respondents listed the effectiveness of U.S. government leaders (75 percent) as their most pressing concern. Other concerns included commodity prices, such as oil and gas (73 percent), recovery of consumer spending (71 percent) and health care costs (70 percent). Credit availability (54 percent) ranked in the bottom three considerations along with the trade deficit and the global stock market unrest.
More than two-thirds of respondents (71 percent) believe they have enough capital to effectively run their businesses.
When asked to describe their points of view on lending criteria and requirements to obtain a line of credit, a quarter of respondents said that today’s lending requirements are appropriate and should not change, while an additional 20 percent believes that further requirements should be put in place to obtain a loan in order to protect small business owners from defaulting.
While credit appears to be available – more than three-quarters of applicants who applied for a loan within the past two years were approved – small business owners may not be taking advantage of their lines of credit to further business objectives.
Of the 64 percent of small business respondents holding an open line of credit, 50 percent earmark the money for emergency purposes only, rather than using it as day-to-day capital.