MINNEAPOLIS--(BUSINESS WIRE)--For the first time in five years, a majority of small business owners are optimistic about the economy, and business owners in regions of the country that last year were most concerned about the economy are now looking up according to results of the 2014 U.S. Bank Annual Small Business Survey.
Now in its fifth year, the U.S. Bank Annual Small Business Survey measured the opinions of more than 3,000 small business owners who shared their views on the state of the national and their local economy today, general business conditions and challenges, and their outlook for 2015.
“We’re pleased to see small business optimism at a five-year high,” said John Elmore, vice chairman for community banking and branch delivery at U.S. Bank. “The survey results confirm what we’re hearing in the field. Business is strong, and while uncertainty remains and is dampening their plans to hire and expand, their outlook for 2015 is trending positive.”
The Economy
In 2014, 56 percent
of small business owners said they feel that the national economy is in
a state of recovery or expansion, up significantly from 46 percent last
year. In 2010, nearly nine out of 10 small business owners said the U.S.
economy was in a recession. This year, that number reached a five-year
low, with only 34 percent of respondents saying they believe the economy
is still in a recession.
Do you believe the U.S. economy is in a recession, recovery, expansion, or are you unsure? | ||||||||
Recession | Recovery | Expansion | Unsure | |||||
2013 | 43% | 45% | 1% | 10% | ||||
2014 | 34% | 52% | 4% | 10% | ||||
Note: percentages not equaling 100% are due to rounding. | ||||||||
States or regions in which small business owners had the strongest rebound in sentiment about the U.S. economy since last year include Arizona (14 percent), Southern California (15 percent), Washington (15 percent) and Missouri (12 percent).
Looking ahead to 2015, more small business owners are hopeful about the potential for economic growth. Fewer business owners think the economy will be in recession in 2015 (41 percent), and while fewer think the economy will be in recovery in 2015, significantly more believe the economy will be expanding in 2015 (16 percent) than those who believe it is expanding now (4 percent).
Percent who believe the U.S. economy will be in a recovery/recession/expansion/unsure next year: | ||||||||
Recovery | Recession | Expansion | Unsure | |||||
Current outlook | 52% | 34% | 4% | 10% | ||||
2015 outlook | 41% | 26% | 16% | 17% | ||||
Business Conditions
More than
two-thirds of business owners (70 percent) believe their business is in
good financial health today, up from 64 percent five years ago. The
percentage of those who report higher revenue continues to hover between
25-30 percent, which has been the case since 2010. The percentage of
business owners who said they expect revenue to be higher next year
dropped significantly in 2013, and increased only slightly in 2014.
Percent who describe the financial health of their business as good, very good or excellent: | ||||||||
2010 | 2011 | 2012 | 2013 | 2014 | ||||
64% | 64% | 69%* | 67% | 70% | ||||
Percent who report higher revenue this year compared to last year: | ||||||||
2010 | 2011 | 2012 | 2013 | 2014 | ||||
25% | 26% | 29% | 29% | 30% | ||||
Percent who expect revenue to be higher at this time next year: | ||||||||
2010 | 2011 | 2012 | 2013 | 2014 | ||||
46% | 49% | 46% | 41%* | 42% | ||||
Those who say they plan to hire, make capital expenses or who have needed to seek financing for their business remains below 30 percent.
Percent who expect to increase the number of people working for them over the next 12 months: | ||||||||
2010 | 2011 | 2012 | 2013 | 2014 | ||||
17% | 22%* | 20% | 16% | 20% | ||||
Percent who are likely to make a capital expenditure to expand their business in the next year: | ||||||||
2010 | 2011 | 2012 | 2013 | 2014 | ||||
28% | 30% | 32% | 28% | 29% | ||||
Percent who have borrowed money or tried to borrow money for business purposes over the last 6 months: | ||||||||
2010 | 2011 | 2012 | 2013 | 2014 | ||||
19% | 20% | 19% | 13%* | 13% | ||||
* Note: Statistical significance is based on variance to prior year at 95% confidence.
Top Issues Facing Small Businesses
Last
year, with the fiscal cliff and government shutdown unfolding, more than
one in five saw the federal budget deficit as the most important
national issue. This year, only 14 percent of owners list it as their
top concern, down 8 percent from 2013. While no single issue is top on
the minds of owners, healthcare is now tied with the federal
budget/deficit as the primary concern, followed by taxes.
Percent who say one of the following is their most important national issue: | |||
2013 | 2014 | ||
1. Federal budget deficit/federal debt (22%) | 1. Federal budget deficit/federal debt (14%) | ||
2. Jobs/unemployment (13%) | 1. Healthcare/Medicare (14%) | ||
3. Healthcare/Medicare (12%) | 3. Taxes (12%) | ||
Technology
Small business
owners nationwide are ahead of the curve when it comes to technology.
According to survey, they are more likely than the general population to
define themselves as innovators and early adopters of new technology,
and mobile capabilities are among the ways they are using it to get an
edge. Across the country, 75 percent of small business owners said they
have integrated mobile technology into their business strategy, whether
through mobile banking, social networking, web design, payments or other
uses. Among them, business owners said that offering a mobile-friendly
website added the most value for their business.
In addition to looking to new technology to position their businesses in the marketplace, 64 percent of small business owners maintain a social media presence to make connections, find talent or market their business. Those who maintain a presence said that Facebook was most effective, followed closely by LinkedIn.
Methodology
The survey was
conducted by Market Probe via an online sample in the first quarter of
2014. They surveyed 3,173 small business owners with less than $10
million in annual revenue. To facilitate differences in select U.S. Bank
markets, the study was conducted in two phases. The first phase
comprised 1,000 national responses to serve as a baseline across U.S.
Bank’s 25-state footprint. The second phase represented an over-sample
of 2,173 interviews in Arizona, California, Colorado, Illinois,
Minnesota, Missouri, Ohio, Oregon, Washington and Wisconsin. Half of the
respondents had businesses with more than $200,000 in revenue, and half
had less than $200,000 in revenue. The survey highlights responses that
are statistically significant based on variance to national, prior year,
or demographic cohort results, with 95% confidence.
About U.S. Bancorp
U.S. Bank’s
commitment to the small business owner extends beyond banking and
lending. U.S. Bank’s small business website, U.S. Bank Connect™, offers
advice and networking opportunities to business owners of varying sizes
and stages of their business life cycle. Follow Connect on Facebook or
Twitter. For more information on U.S. Bank’s full service offering to
small businesses visit www.usbank.com/smallbusiness.
U.S. Bancorp (NYSE: USB), with $371 billion in assets as of March 31, 2014, is the parent company of U.S. Bank National Association, the 5th largest commercial bank in the United States. The company operates 3,083 banking offices in 25 states and 4,878 ATMs and provides a comprehensive line of banking, brokerage, insurance, investment, mortgage, trust and payment services products to consumers, businesses and institutions. Visit U.S. Bancorp on the web at www.usbank.com.