D.C. entrepreneurs compete for talent as revenue growth fuels expansion

Local entrepreneurs are finishing 2018 on a high note, with most D.C. small business owners anticipating year-over-year revenue growth while making plans to hire and expand in the year ahead, according to the fall 2018 Bank of America Business Advantage Small Business Owner Report. While the majority of business owners are pleased with the direction of the economy, D.C. entrepreneurs are struggling to land qualified employees in a highly competitive local job market.

The report, based on a semiannual survey of 1,000 small business owners across the country and the greater Washington, D.C. area, revealed 87 percent of D.C. entrepreneurs are confident their year-end revenue will exceed that of 2017. In addition, over the next 12 months:

  • Seventy percent of D.C. business owners expect their revenue to increase (vs. 65 percent in fall 2017, and a three year high)
  • Seventy-six percent plan to expand (vs. 77 percent in fall 2017) 
  • Thirty-two percent plan to hire (vs. 33 percent in fall 2017) 
  • Fifty-eight percent are confident the D.C. economy will improve (vs. 55 percent in fall 2017) 
  • Fifty-two percent express similar confidence in the national economy (vs. 47 percent in fall 2017)
  • Twenty-two percent intend to apply for a loan (vs. 14 percent in fall 2017, and the highest level in three years)

“Excited about their business prospects, D.C. entrepreneurs are looking to expand and take advantage of a strong economy,” said Michael Bonura, Greater Washington, D.C., small business banker manager at Bank of America. “We’re seeing multiyear highs in expansion and loan application plans—which is consistent with the housing boom taking place in the District—but a highly competitive market for talent is impacting these expansion plans.”

Heightened competition for D.C. talent as small business hiring ramps up

As D.C. business owners make plans to hire in the year ahead, they acknowledge that identifying and retaining employees has become a significant challenge. In the last year, turnover affected 34 percent of D.C. entrepreneurs. Among D.C. business owners who sought to hire new employees, 57 percent say they had difficulty finding qualified candidates, in large part due to the tightening job market. To adjust to these challenges, business owners have modified their hiring strategies to find and recruit top talent by:

  • Shifting to a more flexible culture (31 percent—and the highest among 10 major markets)
  • Utilizing social media to actively attract candidates (24 percent)
  • Offering higher salaries (15 percent)

When it comes to the top characteristics business owners are looking for in their potential job candidates, D.C. entrepreneurs primarily value integrity (49 percent), previous work experience (47 percent) and ability to learn new skills (42 percent).

Concern for most economic issues fades; worry over government regulation and interest rates grows

The survey found a general trend of declining, or steady, concern over most economic factors that are tracked with two notable exceptions. Fifty-two percent of D.C. entrepreneurs are concerned about interest rates, up from 43 percent last fall. Similarly, business owners are increasingly concerned over compliance with government regulations (41 percent), up from 33 percent last fall. Health care costs are once again the top concern for D.C. entrepreneurs at 61 percent (down slightly from 63 percent last fall).

Perhaps a result of recent changes and uncertainty about U.S. trade policies, 39 percent of D.C. business owners identify U.S. trade policy as an economic concern. Thirty-eight percent say the latest tariffs/U.S. trade policies have impacted their businesses, with 17 percent reporting a positive impact, 11 percent reporting both positive and negative effects, and 10 percent reporting a negative impact.

D.C. business owners feel the holiday spirit; recommend entrepreneurship as a career path

D.C. business owners are feeling the holiday spirit as 85 percent plan to offer at least one holiday perk to their employees. The top holiday perks being offered are closing the office during the holidays (49 percent), giving salary bonuses (45 percent) and giving gifts (40 percent). Finally, despite unique challenges in managing a small business, D.C. entrepreneurs love what they do. Eighty-five percent say the added stress of entrepreneurship has been worth it, and 88 percent would recommend that others follow in their footsteps.

For a complete, in-depth look at the insights of the nation’s small business owners, read the fall 2018 Bank of America Business Advantage Small Business Owner Report and for additional insights, download the Small Business Owner Report infographic.

12/13/18


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