Small Business Owners Send Mixed Signals On Economy, According To New American Express Open Research
96% of Business Owners Say Good Customer Service Helped Them Survive Tough Economy
Tapping International Markets Correlates to Success
Optimism among small business owners is on the rise. More than half (56%, up from 48% last fall) have a positive outlook on business prospects over the next six months, according to the American Express OPEN Small Business Monitor, a semi-annual survey now in its eleventh year. At the same time, the employment picture is looking rosier: 35 percent plan to hire full- or part-time employees (up from 31% in the fall), and far fewer said they will freeze hiring or cut back (44%, down from 61% in the fall). In spite of the promising outlook, these signs of recovery do not translate into immediate plans for growth. The top priority of small business owners is maintaining their current business and sources of revenue (31%) followed closely by growing their business (29%, down from 37% last spring).
Based on how their businesses are performing, more than one-third (35%) of small business owners believe the economy is recovering, but they are proceeding with caution and managing their resources more closely by tempering plans for growth, hiring modestly and getting more out of their employees. The payoff is apparent: Two-thirds (67%) say that workforce productivity has improved and fewer are concerned about having cash available to pay bills (50% vs. 59% last spring).
“The research clearly shows that we cannot look at any one economic indicator in a vacuum to predict small business investment behavior,” said Susan Sobbott, president, American Express OPEN. “While small business owners are more optimistic about the economic recovery, they are not turning a blind eye to the uncertainty that lingers. They are waiting for more proof that the recovery is real and sustainable before investing heavily in growth initiatives.”
Men Taking on More Risk than Women
Thirty-four percent of business owners say their appetite for risk is greater than it was a year ago. Men are far more likely to say their appetite for risk is greater than it was a year ago (42% vs. 25% of women). The type of risk entrepreneurs are most willing to assume in order to grow their business is entering a new/unexplored market (19%).
Going Global Reaps Rewards
While growth is not currently a top priority, when asked what would most help them grow their businesses, nearly half (46%) say increased customer demand. Other growth generators include tax cuts (20%), access to capital (13%) and the ability to hire more staff (7%). Tax relief is the most pressing issue the President and Congress need to address (33%).
Entrepreneurs looking beyond U.S. borders for growth opportunities are among those most likely to experience steady revenue gains. While they are still the minority (15%), their success is noteworthy: they report 23 percent revenue growth on average over the last three years.
Recipe for Success
A deeper look at the data reveals steps that all small businesses can learn from:
- Encourage innovation:
- 92 percent of these business owners encourage their employees to innovate, compared to 83 percent of business owners overall
- Do more with less:
- 84 percent believe employee productivity has risen over the last year, compared to 67 percent of business owners overall
- Social media attitude leads to growth:
- 77 percent use social media to attract new customers, compared to 55 percent of business owners overall
- 78 percent are aware of what is being said about their brand online, compared to 58 percent of business owners overall
- 60 percent plan to increase their company’s social media presence, compared to 41 percent of business owners overall
Happy Employees Keep Customer Service Top of Mind
Business owners are holding firm to the tenet that happy employees make for happy customers. Nearly every business owner surveyed (96%) says providing good customer service has helped them survive a tough economy. To keep employees happy, more bosses are offering benefits, such as healthcare (59% vs. 49% last fall).
To set their businesses apart from the competition, 80 percent of entrepreneurs will place a heightened focus on better servicing their customers. In an effort to provide the best customer service possible, more than half (57%) train their employees themselves; one-quarter (26%) have a senior member of staff train them, and one-in-ten (10%) pay for formal training.
Facebook Remains Favorite way to Reach Customers; Google+ Shows Traction
Navigating a tough economy has caused entrepreneurs to use low-cost marketing methods, such as social media (35%), educational marketing (16%) or partnering with non-competitive businesses to stretch marketing budgets (11%).
More than half of business owners use social media tools to attract new customers (55%, up from 50% last fall). Platforms they are using include:
- Facebook (38%)
- Google+ (14%)
- LinkedIn (13%)
- Twitter (11%)
- YouTube (10%)
- Blogs (6%)
- MySpace (4%)
- Foursquare (2%)
- Pinterest (2%)
While social media use is on the rise and correlations to growth are becoming more apparent, just 27 percent say a social media presence is necessary for their company, a similar number (28%) say it is “nice to have” and more than one-third (39%) find it unnecessary. Most business owners tackle social media during daytime working hours (31%); 23 percent tackle it after work and just six percent outsource it. Looking ahead, 41 percent of business owners plan to increase their company’s social media presence in the next year.
Retirement Less of a Concern
Focusing on the long-term has benefited business owners personally. The number of entrepreneurs worried about their ability to save for retirement is down sharply (70%, down from 81% last spring). One-in-five estimate they will need less than $750,000 (20%) to retire, 29 percent say they will need between $750,000 and one million dollars, 21 percent say they will need between one and two million dollars and 17 percent say they will need more than two million to retire. On average, they believe they will need $1,240,000, up slightly from the $1,205,000 they reported in spring 2011.
Additional survey results including findings by geography and gender are available by contacting American Express OPEN.
American Express OPEN Small Business Monitor, released each spring and fall, is based on a nationally representative sample of 813 small business owners/managers of companies with fewer than 100 employees. The anonymous survey was conducted via telephone by Echo Research from February 27- March 15, 2012. The poll has a margin of error of +/- 3.4%.
About American Express OPEN
American Express OPEN is the leading payment card issuer for small businesses in the United States and supports business owners 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. For more information, visit OPEN.com and openforum.com.
American Express is a global services company, providing customers with access to products, insights and experiences that enrich lives and build business success. For more information,visit americanexpress.com.
SOURCE: American Express OPEN