Small business owners' optimism on business prospects and the economy continue to rise, according to the Fall 2014 OPEN Small Business Monitor. Currently, 63% of business owners maintain a positive outlook, a level not reached since fall of 2007 (64%). Stronger revenue growth could be fueling this optimism as more entrepreneurs say their revenues are higher when compared to a year ago (42%, up from 38% in 2013).
The rosier outlook from business owners is reflected in their attitude towards growing their business:
- They are increasingly confident they can access the capital needed to grow their businesses (79%, up from 72% six months ago)
- Cash flow concerns are easing (43%, down from 49% this spring)
- Over the next six months, business growth is the single most important priority for business owners; the last time this occurred was in spring 2011
"Nearly half of all business owners are confident in the U.S. economy and find their businesses in an excellent position for growth," said Alice Bredin, small business advisor to American Express OPEN. "Cash flow is less of a concern and key indicators such as hiring and capital investments are trending in a positive direction."
Big Data for Small Business
As business owners think about growing their businesses, they are looking for ways to get the most out of each customer interaction. To set their businesses apart from the competition, a majority of business owners say they will place a heightened focus on better serving their clients (85%, up from 78% this spring).
As they further sharpen their focus on customers, an increasing number are analyzing data for their businesses (69%, up from 65% in the spring). A majority of entrepreneurs say they see value in analyzing data (sales, customer/other) to better run their enterprises (85%). While many (62%) are aware of low-cost tools for using data analytics, time is the biggest barrier to implementation (48%).
The main reasons for implementing data analytics include:
- Improve current products/services (72%)
- Make key business decisions (66%)
- Boost efficiency (65%)
- Identify ideas for marketing (58%)
- Identify opportunities for new products (52%)
- Track loyalty/rewards usage (37%)
Business Owners Prioritize Hiring and Capital Investments
As entrepreneurs make growth a priority, many are planning investments in their businesses. Hiring plans remain steady as more than one-third of business owners plan to hire over the next six months (37%, compared to 35% in the spring).
Reinvesting in the business remains a priority for entrepreneurs:
- Fifty-seven percent plan to make capital investments over the next six months (compared to 55% in the spring), spending $72,100 on average.
- They will be investing in:
- Technology (45%)
- Office equipment (20%)
- Manufacturing/production equipment (13%)
- Office furnishings (12%)
- Real estate investments (9%)
- They will be investing in:
Success Index Unveils Secret Sauce to Successful Entrepreneurship - Sees Shift in the Middle: "Sustainers" making move to "Strivers"
The semi-annual Small Business Monitor, now in its thirteenth year, includes a Success Index, developed based on responses to questions regarding business growth and characteristics proven to be emblematic of high-performing entrepreneurs. Based on a 100-point scoring scale, four distinct levels emerged: "Strugglers" (scoring between 0-40 points), "Sustainers" (scoring between 41-60 points), "Strivers" (scoring between 61-80 points) and "High achievers", who scored highest on the Index (between 81-100 points).
Successful High Achievers remain 11% of American small business owners surveyed. There has been movement in the middle of the Small Business Success Index as Sustainers rise up (30%, vs. 28% last fall) and become Strivers (39%, vs. 35% last fall). A comparison between these groups reveals what behaviors set High Achievers apart, causes movement up the Index and ultimately contributes to success:
- They make growth a priority: Nearly all High Achievers (92%) say they are planning to grow their businesses over the next six months (versus 78% of Strivers, 71% of Sustainers and 57% of Strugglers) and more than half (51%) have growth as their top priority (compared to 38% of Strivers, just 30% of Sustainers and 26% of Strugglers)
- They invest in their businesses: More than three-quarters of High Achievers (79%) are planning to hire (versus 38% of Strivers, 25% of Sustainers and 32% of Strugglers) and sixty-seven percent are planning to make capital investments (versus 62% of Strivers, 53% of Sustainers and 48% of Strugglers)
- They reward staff before themselves: More than eight-in-ten High Achievers (85%) say they would give employees raises or bonuses (versus 83% of Strivers, just 68% of Sustainers and 66% of Strugglers) before themselves
- They leverage social media: More than seven-in-ten (78%) High Achievers use social media (versus 69% of Strivers, just 53% of Sustainers and 49% of Strugglers)
- More than four-in-ten (42%) say they can't live without their smartphone (versus 34% of Strivers, 24% of Sustainers and 23% of Strugglers)
- They believe in business mentorship: Two-thirds of High Achievers (66%) have a business mentor (versus 39% of Strivers, 34% of Sustainers and 38% of Strugglers)
Additional survey results including findings by industry, geography and gender are available by contacting Alex Della Rocca at 212-539-3203 or firstname.lastname@example.org.
American Express OPEN Small Business Monitor, released each spring and fall, is based on a nationally representative sample of 1130 small business owners/managers of companies with fewer than 100 employees. The anonymous survey was conducted via telephone by Ebiquity August 19-September 12, 2014. The poll has a margin of error of +/- 3.0% at the 95% level of confidence.
OPEN created the "Small Business Owner Success Index" as part of the fall 2012 American Express OPEN Small Business Monitor. The Index takes into account tangible measures of business growth as well as the business owner's mindset in the way they approach the success of their business. The Index ranges from "0" least successful to "100" very successful and was developed based on responses to questions regarding business growth and entrepreneurial characteristics. Business growth was scored based on revenue and employee hiring over a one-year period. Respondents were also asked to rate themselves on 10 characteristics identified in Saras Sarasvathy's (University of Virginia Darden School of Business) study on how great entrepreneurs think.
About American Express OPEN
American Express OPEN is the leading payment card issuer for small businesses in the United States and supports business owners and entrepreneurs with products and services to help them run and grow their businesses. This includes business charge and credit cards that deliver purchasing power, flexibility, rewards, savings on business services from an expanded lineup of partners and online tools and services designed to help improve profitability. Learn more at www.OPEN.com and connect with us at openforum.com and twitter.com/openforum.
American Express is a global services company, providing customers with access to products, insights and experiences that enrich lives and build business success. Learn more at americanexpress.com and connect with us on facebook.com/americanexpress, foursquare.com/americanexpress, linkedin.com/companies/american-express, twitter.com/americanexpress, and youtube.com/americanexpress.