Seven years after the Great Recession, two-thirds of Greater Washington small business owners (65 percent) report their businesses are still recovering, according to the spring 2015 Bank of America Small Business Owner Report, a semi-annual study exploring the concerns, aspirations and perspectives of small business owners in Washington, D.C. and around the country. Though many feel they have not completely recovered, they are more optimistic about their business growth, the economy and hiring plans than they were a year ago, based on findings in the spring 2014 report.
“Although many small business owners in the Greater Washington area are still feeling some effects of the recession, they have consistently kept an eye to the future and are making aggressive plans for growth,” said Ryan Coughlin, Washington, D.C. small business banker manager at Bank of America. “They are motivated and positive individuals who are excited about the future of their businesses.”
Seventy-three percent of Greater Washington entrepreneurs are planning to grow their business in the next five years; this is significantly higher than last year (58 percent) and the national average (66 percent). Additionally, more local small business owners expect their revenue to increase compared to one year ago (63 percent versus 58 percent).
Half of local small business owners (50 percent) say they expect to hire more employees this year, which is a 6 percent increase from one year ago. Despite these hiring projections, 44 percent say that it’s difficult to find qualified candidates. Greater Washington entrepreneurs say the top challenges in finding qualified staff are attributed to a skills gap (60 percent) and high salary demands (51 percent).
In addition to being optimistic about the future of their businesses, Greater Washington entrepreneurs also feel confident about the economy. The majority (54 percent) believe that the national economy will improve over the next year, which is up 12 percent from last year. They’re also feeling positive about their local economy, with 53 percent expecting it to improve in the next 12 months, an 8 percent increase from one year ago.
The cost of health care remains the top concern for Greater Washington entrepreneurs
Although overall optimism is on the rise, Greater Washington small business owners still have concerns over specific issues. Among the categories surveyed, the cost of health care is still the top concern (64 percent), but business owners are less worried than they were six months ago when 78 percent expressed concern, according to the fall 2014 report. Notably, entrepreneurs in Washington, D.C. are less concerned about the effectiveness of U.S. government leaders than the rest of the country (61 percent compared to 69 percent nationally), but remain concerned about consumer spending (60 percent) and the strength of the U.S. dollar (55 percent).
When asked about the impact of specific government policies, Greater Washington small business owners say the greatest potential for a positive impact on their business could come from expanded tax breaks for automatically enrolling employees into retirement savings accounts (35 percent) and incentives to keep jobs on U.S. soil (32 percent). Conversely, the policy that would have the most negative impact on their business would be required health care plans for employees (34 percent). Local small business owners are split about increasing minimum wage; 27 percent say it would negatively affect their business, and the same number say it would have a positive impact.
Local entrepreneurs feel supported by their local community, but less so by policymakers
Greater Washington small business owners overwhelmingly support other small businesses in the community by shopping small. Sixty-two percent of Washington, D.C. small business owners gave themselves an “A” or “B” grade for shopping at other local small businesses. They also rate their local community high in shopping small, as 58 percent handed out an “A” or “B” grade when assessing how well Greater Washington residents frequent small businesses.
While many small business owners feel supported by their local community, only 27 percent of Greater Washington entrepreneurs believe that policymakers appreciate small business owners.
Greater Washington small business owners demonstrate self-sacrifice; prioritize employees
Greater Washington small business owners are prioritizing the needs of customers and employees before their own. The survey reveals that 68 percent of local entrepreneurs would rather delay or reduce their own compensation than take other courses of action to make ends meet; this includes laying off employees (9 percent) or delaying payments to banks and/or creditors (8 percent). Additionally, 39 percent report they already have delayed or foregone their own compensation for the betterment of their business (32 percent nationally), and 39 percent have carried business costs on a personal credit card (35 percent nationally). Forty-seven percent report that they have never given themselves a raise, or haven’t done so in more than two years.
Almost all (95 percent) Greater Washington small business owners say they have employee appreciation programs, including:
- Dinners and outings (47 percent).
- Office recognition (43 percent).
- Spot bonuses (42 percent) .
They also provide a number of work-life balance benefits for employees, including:
- Flexible hours (61 percent).
- Office closure on major holidays (50 percent)
- Paid vacation time (48 percent).
Greater Washington entrepreneurs adapt to customer demand, find ways to show appreciation
The majority (58 percent) of Greater Washington small business owners cite that establishing relationships with customers and clients is the primary driver of repeat business, and they find many ways to show their appreciation, including:
- Free products or services for their first visit (36 percent)
- Monetary rewards, such as discounts or free upgrades (35 percent).
- Events or celebrations (32 percent).
- Loyalty programs, such as a stamp card or loyalty app (32 percent).
Additionally, 70 percent say a primary way in which they have adapted to customer demands is by becoming more technologically savvy, which is 8 percent higher than the national average.
For an in-depth look at the attributes of the nation’s small business owners, read the full spring 2015 Bank of America Small Business Owner Report, and for additional Washington, D.C.-based insights, download the Small Business Owner Report D.C. infographic here.
About the Bank of America Small Business Owner Report
Braun
Research conducted the Bank of America Small Business Owner Report
survey by phone, from March 4, 2015, through March 27, 2015, 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
each of 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 is +/ 5.7 percent, 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.
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Contacts:
Nicole Nastacie, Bank of America,
1.980.388.7252
nicole.nastacie@bankofamerica.com
