Small Businesses on Track to Beat Revenues as Confidence in the Economy Surges

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The core of the U.S. small business sector is solid, with many entrepreneurs expressing confidence that they will generate higher year-end revenues compared to 2016, and that the 2018 economy will improve. According to the fall 2017 Bank of America Business Advantage Small Business Owner Report, a semi-annual survey of 1,000 business owners across the country, nearly three-quarters of entrepreneurs are optimistic their 2017 year-end revenue will surpass 2016 revenue. Confidence in the economy also surged as nearly half of business owners expect their local economy and the national economy to improve in the year ahead (up 11 percentage points and 15 percentage points, respectively, from fall 2016).

The positive outlook on the economy bodes well for growth, as 92% of small business owners indicated that a positive economic environment is a critical factor to their ability to grow. Other growth factors include customer demand (93%), the ability to attract and retain quality employees (76%), favorable government policies (76%) and access to capital (63%).

The report, however, also found that long-term growth plans remain unchanged from fall 2016, as 51% of small business owners plan to grow their business over the next five years. In addition, plans to hire are down year-over-year as 16% of entrepreneurs plan to hire more employees in the year ahead (vs. 25% in fall 2016).

“Entrepreneurs continue to be upbeat about future economic growth as they set their sights on 2018,” said Sharon Miller, head of small business, Bank of America. “Small business owners are optimistic about their ability to close the year strong and the outlook for the economy in the year ahead. However, these surges in small business owner confidence have not yet translated into plans for long-term growth.”

Rural business owners more confident about economy, urban counterparts more optimistic on revenue, growth and hiring

The report also revealed that entrepreneurs in urban areas have the most dynamic business outlooks and plans for growth, while their rural counterparts are more upbeat about the economy. Specifically:

  • Fifty-seven percent of urban entrepreneurs plan to grow their business over the next five years (vs. 50% of their rural peers).
  • Fifty-two percent of urban business owners are confident that their revenue will increase in the coming year (vs. 47% of rural entrepreneurs).
  • Twenty percent of urban entrepreneurs plan to hire in 2018 (vs. 15% of rural business owners).

Conversely, rural entrepreneurs’ confidence in the national economy tops that of their urban counterparts. Fifty-one percent of rural business owners believe the national economy will improve over the next 12 months, compared to 45 percent of business owners in urban areas.

For urban and rural business owners, there are several areas where the level of economic concern varies widely based on location. Urban entrepreneurs are more concerned than their rural counterparts about the U.S. and/or global stock market (52% of urban vs. 33% of rural) and credit availability (36% of urban vs. 25% of rural). Meanwhile, rural business owners are more concerned than urban entrepreneurs about the strength of the U.S. dollar (60% of rural vs. 48% of urban), consumer spending (56% of rural vs. 40% of urban) and commodities prices (53% of rural vs. 45% of urban). Even with these differences, the cost of health care tops the list of economic concerns for both urban and rural business owners (70% and 72% are concerned, respectively).

A snapshot of small business owners across generations and genders

The report also revealed varying levels of business owners’ optimism and future expectations when cutting across generations and genders. Specifically, millennial entrepreneurs have a significantly more optimistic outlook in a number of areas, including:

  • Eighty-one percent expect their revenue to increase in 2018 (30 percentage points higher than the national average).
  • Forty-three percent plan to hire in the year ahead (27 percentage points higher than the national average).
  • Seventy-six percent plan to grow over the next five years (25 percentage points higher than the national average).
  • Sixty-three percent expect their local economy to improve within the next 12 months (15 percentage points higher than the national average).

Meanwhile, male business owners are more confident than their female counterparts that the national economy will improve in 2018 (51% of men vs. 40% of women), but women entrepreneurs are more likely to expect their revenue to increase in the year ahead (55% of women vs. 48% of men). When it comes to hiring, men and women entrepreneurs are on the same page, with 16% of both genders planning to hire in 2018.


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