Bank of America Small Business Owner Report Finds 82 Percent of Millennial Small Business Owners Are Optimistic About Their Local Economy

Small business owners, particularly members of the millennial generation, are more confident in the future of the local and national economies, according to the fall 2014 Small Business Owner Report, released today by Bank of America. According to the report, based on a semi-annual survey of 1,000 small business owners across the country, half (50 percent) of respondents believe their local economy will improve over the next 12 months, up from 45 percent a year ago, and 45 percent believe the national economy will improve over the same period, up from 41 percent a year ago. This iteration of the report examines specific concerns, aspirations and perspectives of three different generations of small business owners: millennials (ages 18-34), Generation-X (ages 35-49) and baby boomers (ages 50-68).

“Millennial small business owners have become a positive, driving force in our economy,” said Robb Hilson, Bank of America Small Business executive. “Whether it’s embracing and adapting to new technology, growing their business or confidently contributing to their local economies, they are a growing influence on our country’s economic success.”

The survey results vary significantly by age group, with the greatest optimism expressed by millennials. According to the survey, 82 percent of millennial respondents say they are confident that their local economy will improve over the next 12 months, followed by Gen-Xers at 50 percent and baby boomers at 41 percent. Additionally, the study shows that nearly three-quarters (74 percent) of millennials feel confident that the national economy will improve over the next 12 months, while only 45 percent of Gen-Xers and 35 percent of boomers feel the same way.

The research also finds a number of generational differences among small business owners in their perspectives on business growth:

• Seventy-eight percent of millennial small business owners and 71 percent of Gen-Xers expect their revenue to increase over the next 12 months, compared to 52 percent of boomers.
• Nearly nine in 10 millennials (87 percent) plan to grow their business over the next five years, compared to 73 percent of Gen-Xers and 57 percent of boomers.
• When asked about expansion plans for their business in the next 12 months, Gen-Xers and boomers are most likely to target new industries and new customers (51 percent and 40 percent, respectively), while millennials are most likely to expand by hiring additional staff (59 percent).
• Small business owners believe they will be ending their year on a good note, with more than three-quarters (77 percent) expecting to achieve their year-end revenue goals. Millennials are the most optimistic, with 93 percent believing they will meet their target, compared to 80 percent of Gen-Xers and 73 percent of boomers.

Influence of technology different among generations
While more than half (58 percent) of boomer small business owners give themselves an “A” or “B” when asked to grade the tech savviness of themselves or their business, millennial and Gen-X business owners rate their tech savviness significantly higher. Not surprisingly, 85 percent of millennials gave themselves an A or B, and 74 percent of Gen-Xers graded themselves an A or B.

Despite the fact that more than half the boomer respondents rated their tech savviness at an A or B level, the majority (59 percent) also indicated they could run their business successfully “indefinitely” without their smartphone or tablet, compared to only 22 percent of millennials and 39 percent of Gen-Xers. In fact, 44 percent of millennials and Gen-Xers said they could only successfully run their business without a smartphone or tablet for one day or less.

Across all three generations, small business owners agree that technology allows them to feel more in control of their business. When asked about technology as it relates to managing the day-to-day aspects of their business, 58 percent of survey respondents said it allows them to feel more in control, and 71 percent believe that technology saves them time.

Generational identities and perceptions
The report also asked small business owners to identify key traits that best describe their generation. One-third of Gen-Xers (33 percent) and more than half (52 percent) of boomers describe their respective generations as “hardworking/dedicated,” compared to only 7 percent of millennials who share that view about their generation. At the same time, however, millennials view their generation as “creative” (26 percent), “confident” (18 percent), and “optimistic” (15 percent). Gen-Xers are more likely than any other generation to describe themselves as “independent” (15 percent) and “realistic” (11 percent).

Even though millennial small business owners seem to be most poised for growth, 37 percent of Gen-Xers and 38 percent of boomers think millennials are entitled and want success without putting in hard work. On the other hand, 21 percent of millennials say they value the mentorship that older generations provide and believe Gen-Xers and boomers value and reward loyalty (22 percent).

Living the American Dream
Despite the differing perceptions by generation, the study found that nearly eight in 10 small business owners (79 percent) believe they have achieved the “American Dream.” More specifically, 88 percent of millennial respondents believe they have achieved the American Dream, compared to 79 percent of Gen-Xers and 76 percent of boomers. Across all small business owners, when asked which statement best describes their view of the American Dream for entrepreneurs, respondents said:

• It’s possible to achieve with hard work (51 percent).
• It has meant something different to me at various stages of my life (32 percent).
• It’s too expensive to achieve (5 percent).
• It only applies to those from an affluent background (5 percent).

Small business owners more generous this holiday season
According to the report, many small business owners are feeling generous this holiday season with more than half (52 percent) planning to offer holiday salary bonuses to their employees, compared to 49 percent last year, and nearly half (49 percent) planning to throw a party for their employees, up from 43 percent last year.

Survey participants were also asked about the impact on their business of the Black Friday and Cyber Monday holiday sales periods. Despite the hype these sales days have created in recent years, few small business owners feel that Black Friday (38 percent) and Cyber Monday (29 percent) have an impact on their business’s bottom line. However, these numbers have increased from last year, when 34 percent and 26 percent viewed Black Friday and Cyber Monday, respectively, as having an impact on their bottom line.

The increased significance of Black Friday could be driven by millennial small business owners, 41 percent of which feel this holiday is one of many significant factors that impact their business’s bottom line.

Local insights across the country
The report also analyzed specific needs of small business owners in nine local markets across the country. Key insights gathered include:

• Small business owners in Los Angeles and Miami are most optimistic about their local economy and staffing prospects. According to the survey, 62 percent of respondents in Los Angeles say they are confident that their local economy will improve over the next 12 months, followed by Miami at 59 percent. More than half of small business owners in Los Angeles (58 percent) and Miami (55 percent) plan to hire more employees in the next year.
• About three-quarters of small business owners in Atlanta (76 percent), Los Angeles (75 percent) and San Francisco (75 percent) are most likely to give themselves an “A” or “B” when asked to grade the tech savviness of themselves or their business. Conversely, only 58 percent of small business owners in Dallas would give themselves a top A or B letter grade.
• Greater Washington small business owners’ revenue expectations have spiked in the last 12 months. Seventy-three percent of local entrepreneurs in this region forecast an increase in revenue over the next year, more than any market surveyed and a 15 percent increase from last year.

For more information about the mindset of small business owners across the country, read the fall 2014 Small Business Owner Report.

About the Bank of America Small Business Owner Report
Braun Research conducted the Bank of America Small Business Owner Report survey by phone in October 2014, on behalf of Bank of America. Braun contacted a nationally representative sample of 1,000 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 also surveyed in 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 (where n=300) is +/ 5.7 percent; and the margin of error for the oversampled markets (where n=301) is +/ 5.6 percent, with each reported at a 95 percent confidence level.

The Braun Research survey results conducted on behalf 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 America
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