Chicago entrepreneurs increasing plans to hire

With confidence in the local economy holding steady, Chicago entrepreneurs are cautiously optimistic about the future as more plan to hire this spring and a majority anticipate long-term growth

Drew Piazza
Chicago small business banker manager for Bank of America

Twenty-eight percent of Chicago entrepreneurs plan to hire more employees in the year ahead — 6 percentage points above the national average and up 4 percentage points from spring 2017, according to the spring 2018 Bank of America Business Advantage Small Business Owner Report.

The report, based on a semiannual survey of 1,000 small business owners across the country and in the Chicagoland area, also found Chicago business owners’ confidence in their local economy held steady year over year, while confidence in the national economy declined slightly. This spring, 44 percent of entrepreneurs are confident the Chicago economy will improve in 2018, up 2 percentage points from spring 2017. Similarly, 43 percent of Chicago entrepreneurs are confident the national economy will improve in 2018 — down 4 percentage points from spring 2017 and 11 percentage points lower than the national average.

 

Meanwhile, though 53 percent of local entrepreneurs believe their revenue will increase in 2018, Chicago small business owners’ revenue expectations are 7 percentage points below the national average and the lowest among entrepreneurs surveyed in 10 major cities. In addition, 61 percent of Chicagoland small business owners plan to grow their business over the next five years, down 4 percentage points from a year ago.

“With confidence in the local economy holding steady, Chicago entrepreneurs are cautiously optimistic about the future as more plan to hire this spring and a majority anticipate long-term growth,” said Drew Piazza, Chicago small business banker manager for Bank of America. “Chicago’s small business owners are also embracing cutting-edge technologies and leveraging digital tools to continue innovating and cultivating a positive environment for business growth."

Chicago entrepreneurs split on tax reform, while economic concerns for the year ahead increase slightly

According to the report, Chicago entrepreneurs are split when it comes to the new tax code and its impact on small business. Forty-nine percent of Chicago business owners cite the new policy as a game-changer for small businesses overall, 9 percentage points lower than the national average. In addition, while 54 percent say it has made them more optimistic about their business outlook, this number trails the national average by 9 percentage points. Only 39 percent of Chicago entrepreneurs have altered their business plans for 2018 as a result of the new tax code. Despite this, 70 percent of Chicago entrepreneurs expect to receive savings for their business because of the policy, and they plan to use these funds to fuel further growth, including:

• Investing back into their business (35 percent).

• Awarding raises and bonuses to employees (19 percent).

• Paying off loans (16 percent).

• Expanding operations (15 percent).

Looking beyond the new tax policy, concern about other economic factors is on par with last year. Health care costs remain a top concern (69 percent) for entrepreneurs, while concern over other economic areas saw minimal increases since spring 2017, including:

• Interest rates (54 percent, up 5 percentage points year over year).

• Consumer spending (51 percent, steady year over year).

• Strength of the U.S. dollar (49 percent, up 4 percentage points year over year).

• U.S. and global stock market (47 percent, up 5 percentage points year over year).

All-digital payments predicted within the next five years, while smartphone use is widespread


Perhaps one of the most significant innovations disrupting the small business marketplace is in the digital payments space, with the majority of Chicago small businesses (56 percent) predicting all business payments will be transacted digitally within five years.

The report found that mobile use is nearly universal among local business owners, with 89 percent of Chicago entrepreneurs using smartphones and other mobile devices to manage their business, including:

• Basic tasks (71 percent).

• Digital banking (41 percent).

• Social media updates (41 percent).

• Digital payments (29 percent).

• Comprehensive financial tracking (15 percent).

Greater adoption and reliance on technology comes with some risk


Greater reliance on technology can also create challenges for Chicago entrepreneurs, as 52 percent believe their business would suffer if the internet crashed for a week, including 39 percent who say they would lose revenue and 26 percent who would lose customers. Eleven percent of local entrepreneurs say they have been impacted by a data breach in the last year, 3 percentage points higher than the national average.

Although the expanding role of new technologies presents some risks and challenges, Chicago business owners believe the positives far outweigh the negatives. A strong majority (81 percent) believe their future success is dependent on technology as opposed to being threatened by it (19 percent). Additionally, 82 percent of Chicago business owners make annual investments in technology, with 40 percent doing so at least once per quarter.

Emerging technologies set to transform the small business landscape, blockchain remains a question mark

Chicago business owners are investing in emerging technology at a rapid pace, with half of survey respondents reporting they currently use or are actively exploring the use of advanced technologies for their business, including:

• The Internet of things (21 percent).

• Data analytics (19 percent).

• 3D printing (14 percent).

• Artificial intelligence (9 percent).

• Virtual/augmented reality (8 percent).

Chicago entrepreneurs are still hesitant about blockchain and cryptocurrencies. Fifty-four percent of Chicago business owners say they are unfamiliar with the distributed ledger technology, and only 18 percent believe it will be relevant to their business in the near future. In addition, only 27 percent of Chicago business owners anticipate accepting cryptocurrency in the next five years.

Download the spring 2018 Bank of America Small Business Owner Report

6/13/2018


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