Small Business Owners Mixed On Economy, Signs Of Improvement
Small business owners are divided about whether the national economy is in recession or recovery in 2013, according to results of the 2013 U.S. Bank Small Business Annual Survey. The survey also revealed trends in economic sentiment, business conditions, issues of greatest concern to small business owners and their plans for future hiring and capital expenditures.
Now in its fourth year, the survey polled 3,210 small businesses with $10 million or less in annual revenue during the first quarter of 2013 across the 25 states where U.S. Bank provides small business banking services.
Those who believed the economy is in recovery (45 percent) held a slight edge on the number of small business owners who said they believe the economy is in recession (43 percent). The federal budget deficit/debt is the top national issue for small business owners in 2013, followed by unemployment, healthcare and taxes. In 2012, small business owners said healthcare was their biggest concern, followed by unemployment, taxes and the federal budget.
Do you believe the U.S. economy is in a ...
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Recovery Recession Expansion Unsure
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45% 43% 1% 10%
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“These results are very consistent with what we’re hearing in the field, ” said John Elmore, vice chairman of community banking and branch delivery at U.S. Bank. “Last year, 70 percent of our respondents said they believed the economy was in recession, so even though we asked the question a little differently this year, it’s clear that small business owners feel a little better about current economic conditions than they did in 2012. However, uncertainty about the federal budget, unemployment and taxes are clearly a concern. If those variables improve, I believe we have a small business sector that is ready to soar.”
Business conditions
Two-thirds of the survey respondents describe their business as at least “good,” but many have tempered expectations for 2014, with lower revenue expectations, and plans for hiring and capital expenditures mostly on par with what owners reported in 2012.
How would you describe the financial health of your business?
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2010 2012 2013
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Good, Very Good or Excellent 64% 64% 69% 67%
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Fair to poor 36% 36% 31% 33%
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How has revenue for your business changed compared to this time last year?
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2010 2012 2013
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Higher 25% 26% 29% 29%
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About the same 31% 38% 40% 43%
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Lower 45% 36% 31% 29%
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At this same time next year, do you expect your revenues to be...
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2010 2012 2013
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Higher 46% 49% 46% 41%
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About the same 43% 41% 44% 47%
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Lower 11% 10% 10% 12%
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Over the next 12 months, do you expect to increase or decrease the total
number of people working for you?
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2010 2012 2013
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Increase 17% 22% 20% 16%
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Decrease 9% 7% 5% 5%
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Remain the same 74% 70% 75% 79%
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How likely are you to make capital expenditures to expand your business in the
next year?
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2010 2012 2013
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Likely 28% 30% 32% 28%
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Unlikely 68% 65% 63% 67%
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Unsure 4% 5% 5% 5%
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Small business owner sentiment about the impact of the new health care law was largely consistent from 2012 to 2013, however concern has increased since 2010.
In the long run, do you believe the national health care reform law will be:
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2010 2012 2013
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Positive 24% 23% 21% 20%
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Negative 55% 57% 60% 60%
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Unsure 10% 10% 7% 8%
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The uncertainty of the fiscal cliff had some impact on business owners’ plans for 2013, but the majority (59 percent) said they did not implement a contingency plan. Of the 14 percent who did have a contingency plan, most (74 percent) said the plan included postponing planned investments in their business. Additionally, 82 percent of those with a contingency plan said they implemented their plan despite developments to resolve the issue in Washington D.C. Twenty-eight percent of business owners did not have a business plan for 2013.
Technology
Small business owners are more likely than the general population to be innovators and early adopters of new technology. The majority of owners are currently using mobile technology for business purposes, whether it’s checking online banking statements, paying credit card bills, maintaining their calendar, social networking or sending and receiving email.
When it comes to adopting new technology, how would you classify yourself?
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Early
Innovator Early Adopter Majority Late Majority Laggard
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Small
Business 6% 24% 33% 31% 6%
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General
Population 3% 14% 34% 34% 16%
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Source for general population: Rogers, E.M., Diffusion of Innovators, 4th
Edition (New York Free Press, 1995).
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