CHARLOTTE, N.C.--(BUSINESS WIRE)--Small business owners handed out significantly higher scores when asked about the health of the economy and their potential for economic growth than they did six months ago, according to the Bank of America/CFI Group Small Business Forecast released today.
Small business owners rated the health of their local economy 20 percent higher than they did in August 2014. In addition, they are 14 percent more optimistic about their potential for economic growth over the next six months. Overall, the small business owners’ satisfaction/optimism index moved from a 69 to a 70, on a scale of 1-100.
“Entrepreneurs are feeling the effects of an improving economy and they believe 2015 will be a strong year for small businesses,” said Robb Hilson, small business executive at Bank of America. “Economic optimism is running high, and we’re excited to see how small business owners’ enthusiasm and increased confidence will shape their plans for long-term business growth.”
The Bank of America/CFI Group Small Business Forecast measures the factors that drive development and the economy in the small business community at large. Results of the study, which can be found here, reveal small business owners’ expectations for staffing, spending and revenue along with economic health and lifestyle satisfaction in the coming year. The index results are derived from a statistical model designed to identify the key predictors of small business owners’ growth expectations.
Small business owners feel business is stronger yet remain cautious
When asked to assess the health of their small businesses, 37 percent of respondents said small businesses are doing “well” or “very well,” up from 27 percent in August 2014. On the flip side, just 15 percent feel the health of their small business is “poor” or “very poor,” compared to 21 percent who shared those responses six months ago. Similar to previous findings though, entrepreneurs aren’t making immediate changes to their business just yet and are still taking a relatively cautious approach to growing in terms of hiring and investment.
One reason these businesses may be hesitant to make decisions that affect growth could be attributed to difficulty in finding qualified candidates to fill open positions at their companies, with small business owners indicating a slight downturn (4 percent) in availability of qualified candidates from six months ago. Additionally, as the economy continues to improve, the survey suggests that small business owners are increasingly worried about staff turnover.
“We’re seeing a really dramatic shift in small business owners’ optimism about the health of the economy and the prospects for their own businesses from just a few months ago,” said Rodger Park, director of Customer Analytics at CFI Group. “However, the survey results suggest that small business owners are still cautious about making large staff and capital investments.”
Financial environment increasingly strong but taxes remain a concern
The financial environment is also primed to support small business growth, with small business owners rating their access to credit up 7 percent from six months ago. Small business owners also reported a better cash flow position for their business, with research indicating a 4 percent improvement from the previous study.
When it comes to characterizing the local tax environment for small businesses, one-third (33 percent) of respondents say it is “unfavorable,” while 12 percent say “very favorable.” This was virtually unchanged from the August index.
Small businesses owners less concerned about risks to their business
When asked about risks facing their business, small business owners were less concerned across a variety of categories than they were six months ago.
Health care costs continue to be viewed by small business owners as the biggest risk facing their business, scoring a 56 out of a 100 on the Small Business Forecast. However, they are less concerned than they were six months ago when health care cost risks scored a 62, a 10 percent decrease from six months ago.
Other top risks highlighted by entrepreneurs include the strength of the U.S. dollar, regulatory environment, consumer spending and reputational risk. However, our top five risk categories all scored lower when compared to six months ago.
Generations differ on confidence in the economy and growth plans
Millennials tend to be the most positive about the future of their business, scoring 80 out of 100 in the Optimism category, with Gen-Xers scoring 73 and boomers 67. They are also the most confident about the state of the economy (58 out of 100), while boomers are more negative (49). This was similar to findings in the fall 2014 Bank of America Small Business Owner Report. In addition, millennials are also most likely to plan to grow their business (65 out of 100), followed closely by Gen-Xers (61).
Bank of America
Bank of America is one of the world's largest financial institutions, serving individual consumers, small- and middle-market businesses and large corporations with a full range of banking, investing, asset management and other financial and risk management products and services. The company provides unmatched convenience in the United States, serving approximately 48 million consumer and small business relationships with approximately 4,800 retail banking offices and approximately 15,800 ATMs and award-winning online banking with 31 million active users and approximately 17 million mobile users. Bank of America is among the world's leading wealth management companies and is a global leader in corporate and investment banking and trading across a broad range of asset classes, serving corporations, governments, institutions and individuals around the world. Bank of America offers industry-leading support to approximately 3 million small business owners through a suite of innovative, easy-to-use online products and services. The company serves clients through operations in more than 40 countries. Bank of America Corporation stock (NYSE: BAC) is listed on the New York Stock Exchange.
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CFI Group is a global leader in providing customer feedback insights through analytics. CFI Group provides a platform that leverages the science of its exclusive partner, the American Customer Satisfaction Index (ACSI) to assess the customer experience across multiple channels, benchmark performance, and prioritize improvement initiatives for maximum impact. Founded in 1988 and headquartered in Ann Arbor, Michigan, CFI Group serves global clients from a network of offices worldwide. Its clients span a variety of industries, including financial services, hospitality, manufacturing, telecom, retail and government.
CFI Group conducted the second wave of the Bank of America/CFI Group Small Business Forecast survey by phone between January 2 and January 26, 2015. The nationally representative survey sample included 1,000 small business owners and managers in the continental U.S. whose companies reported annual revenue between $100,000 and $5,000,000. Following data cleaning and validation, 995 responses were used for the analysis. Factor/Index scores have a margin of error of approximately +/- 1.5 points and individual item scores have a margin of error of approximately +/- 2.5 points at the 95% level of statistical confidence.