Small businesses are still feeling the effects of a challenging economic
landscape, but are increasingly optimistic about the future of their
business and the economy, particularly at the local level, according to
Capital One’s latest Spark Business Barometer.
The quarterly nationwide survey measuring the economic perceptions and
financial conditions of small business owners, as well as the most
common trends and challenges facing small businesses today, found nearly
half (49 percent) of business owners are optimistic about the national
economy over the next 12 months, and more than two thirds (67 percent)
feel good about the future of their local economies. Additionally,
despite predominantly negative views of current business conditions
(with more than half reporting current financial conditions as “fair” or
“poor”), 48 percent believe their financial position will improve over
the next six months.
“By engaging with small business owners in this quarter’s Barometer and
on our ‘I
Am Small Business Proud’ road trip across America, we’re seeing that
small businesses are optimistic about the future and hungry for new,
innovative ways to build and enhance their companies,” said Keri Gohman,
head of small business banking at Capital One. “We know small business
owners are looking for solutions that make it easier for them to grow
and manage their businesses, and at Spark Business, we’re committed to
delivering great products and tools to help them succeed.”
The Spark Business Barometer revealed the following key findings:
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Economic sentiment is improving, particularly at the local level.
More small business owners are optimistic about the economic outlook
over the next 12 months, particularly for their local economies, which
67 percent said they feel “positive” about. Three out of five (61
percent) minority small business owners are confident about the
trajectory of the national economy.
-
Financial outlook is up, particularly among women, despite
continued challenges. Consistent with last quarter, approximately
one third (34 percent) of business owners reported that their
businesses’ finances are improved, while 20 percent say their finances
are worse. The outlook for the future, however, has improved – with 48
percent believing their financial situation will improve over the next
six months. Women are especially positive, with 57 percent of female
business owners expecting improved financial performance in six months.
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Small businesses are adopting mobile technology at a rapid pace,
but security concerns remain. Last quarter’s Barometer showed 86
percent of business owners use mobile phones to communicate with
customers and other third parties, and this quarter’s survey revealed
more than a third (36 percent) use mobile apps on smart phones or
tablets to help manage their business (with nearly a quarter using
mobile apps every day). Concerns related to security remain, however,
with 25 percent of business owners citing security as a primary issue
with using mobile business applications.
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Few small businesses use Small Business Administration (SBA) loans,
and those who do find them “complex and confusing”. Though a
majority (79 percent) of small business owners are aware of SBA loans,
only nine percent have applied for one. Of those who have applied for
an SBA loan, 73 percent classify the process as either very or
somewhat complicated.
“It’s interesting to see how confidence in local economies is surpassing
that of the national economy, demonstrating the importance of focusing
on ‘local’ and ‘small’ and delivering products and tools that cater to
their needs,” Gohman said. “At the same time, it’s clear that beyond
delivering great products, we must educate small businesses on the best
ways to adopt and leverage those products – and help demystify the more
complex or technical resources out there, like SBA loans and mobile
technologies.”
Results Highlights
Financial Performance:
According to this quarter’s survey results, 38 percent of small
businesses increased sales over the past six months (compared to 40
percent of small businesses reporting sales increases over the past six
months last quarter). At the same time, the percentage of small
businesses reporting declining sales has increased from 18 percent at
the end of last year to 26 percent in the first quarter of 2014. Firms
in the financial sector (48 percent) and those with primarily national
and international customer bases (52 percent) were more likely to report
improved sales results.
Capital One asked small business owners nationwide how their current
financial situation compares to this time last year. More than one third
(34 percent) reported that their firms’ finances are better, while one
in five (20 percent) believe their finances are worse. More than four in
ten (44 percent) small business owners reported their business finances
have held steady over the last year, mirroring results in the previous
quarter.
National sentiment about current business conditions remains negative,
consistent with results in Q4 2013. The majority (53 percent) of small
business owners describe current business conditions as only fair or
poor, compared to 44 percent who describe conditions as excellent or
good. Firms with a primarily local customer base are more likely to view
the current business environment negatively, with 57 percent describing
conditions as fair or poor.
Economic Outlook
After a decline in optimism between Q3 and Q4 of 2013, small business
sentiment regarding the national economic outlook is improving. Nearly
half (49 percent) of small business owners are optimistic about the
national economy over the year, while 44 percent are pessimistic.
Optimism is up three percentage points since the previous quarter, while
pessimism is down five percentage points. More than two thirds (67
percent) of small business owners are optimistic about the 12-month
outlook for the local economy. Since the previous quarter, optimism has
increased by 11 percentage points and is particularly strong among
minority small business owners (77 percent) and firms in the
construction industry (77 percent).
Business Technology:
Twenty-four percent of small business owners nationwide leverage
applications on smartphones and tablets to help manage their firms on a
daily basis, while three out of five (61 percent) small business owners
do not use mobile technology. Firms in the transport industry (57
percent) and services industry (28 percent) are more likely to rely on
mobile technology to support business operations, while the majority of
firms in the retail sector (71 percent) do not leverage mobile
technology. One quarter (25 percent) of small business owners cite
security concerns and the need to protect sensitive information as their
primary issues with mobile business applications.
Given how vital small business success is to both the national and local
economy, Capital One remains committed to understanding the challenges,
trends and perceptions that affect overall performance and day-to-day
operations. Capital One strives to understand the small business
landscape, in an effort to better serve its clients and customers across
the country. Follow along on Facebook at Capital One Small Business and
on Twitter at @CapitalOneSpark. When sharing on social media, please use
hashtag #SparkBizBarometer to follow the conversation.
Survey Methodology
The findings reported in this release are from a telephone survey
conducted by the opinion research firm, APCO Insight, the global opinion
research division of communications consultancy, APCO Worldwide. APCO
Insight interviewed a nationally-representative random sample of 400
for-profit small businesses in the U.S., weighted to Dunn and Bradstreet
counts of all businesses nationwide by SIC code, employee size, and
geography. Small businesses are defined as those with less than $10
million in annual revenue. The interviews were conducted from March 21 –
March 31, 2014. All interviews were conducted by telephone at their
places of business. One respondent per business was contacted. The
margin of error is ± 4.9 percentage points at the 95% confidence level.
Interviews were monitored at random. Sampling for this study was
conducted using a national sample of businesses drawn from InfoUSA. All
interviews were conducted using a computer assisted telephone
interviewing (CATI) system. Statistical weights were designed from the
United States Department of Commerce to ensure proper inclusion of all
SIC codes.
About Capital One
Capital One Financial Corporation (www.capitalone.com)
is a financial holding company whose subsidiaries, which include Capital
One, N.A., and Capital One Bank (USA), N. A., had $208.3 billion in
deposits and $290.5 billion in total assets as of March 31, 2014.
Headquartered in McLean, Virginia, Capital One offers a broad spectrum
of financial products and services to consumers, small businesses and
commercial clients through a variety of channels. Capital One, N.A. has
more than 900 branch locations primarily in New York, New Jersey, Texas,
Louisiana, Maryland, Virginia and the District of Columbia. A Fortune
500 company, Capital One trades on the New York Stock Exchange under the
symbol "COF" and is included in the S&P 100 index.
Copyright Business Wire 2014