Houston entrepreneurs’ business outlook for 2019 surpasses national average

Houston entrepreneurs are projecting a strong but more cautious business outlook this spring, with revenue expectations and expansion plans dipping over the last six months, according to the spring 2019 Bank of America Business Advantage Small Business Owner Report. Though area business owners remain more optimistic than their peers nationwide, their confidence in the local economy has weakened since fall 2018.

The report, based on a semiannual survey of over 1,500 small business owners across the country and the greater Houston area, reveals that:

Houston entrepreneurs’ business outlook over the next 12 months remains strong, but more cautious:

  • Seventy-six percent plan to expand their business (down from 86 percent in fall 2018, but 9 percentage points above the national average of 67 percent this spring).
  • Seventy-four percent believe their revenue will increase (down from 81 percent in fall 2018, but 15 percentage points above the national average of 59 percent this spring).
  • Thirty-six percent plan to hire (vs. 38 percent in fall 2018, and 12 percentage points above the national average of 24 percent this spring).
  • Seventeen percent plan to apply for a loan (level since fall 2018).

Their economic outlook weakens slightly, but remains above the national average:

  • Sixty-six percent believe their local economy will improve (down from 75 percent in fall 2018, but 16 percentage points above the national average of 50 percent this spring).
  • Fifty-seven percent believe the national economy will improve (vs. 56 percent in fall 2018, and 9 percentage points above the national average of 48 percent this spring).
  • Top economic concerns include the political environment (67 percent), health care costs (62 percent), the strength of the U.S. dollar (54 percent) and stock market (53 percent).

“Houston business owners are a bit more cautious today than they were six months ago, but their confidence in their businesses and the economy remains above that of their national counterparts,” said Elizabeth Romero, central small business division executive at Bank of America who is based in Houston. “While expansion plans have simmered somewhat since last fall, hiring plans remain steady, and the majority of business owners continue to invest in their businesses.”

Houston business owners split on effects of recent policy changes, contemplate impact of climate change in the Energy Capital of the world

Sixty-seven percent of Houston entrepreneurs expressed concern about the current political environment, though they are divided over how major policy issues are directly impacting them. Fifty-five percent of Houston business owners say the new tax code has had an impact on their business — with 36 percent reporting that impact as positive, the highest among business owners surveyed in 10 major cities. This is down from the 46 percent who anticipated a positive impact one year ago.

Regarding U.S. trade policy, 47 percent say they have been impacted by tariffs, with 22 percent reporting that impact as mixed, 16 percent reporting it as positive and 9 percent reporting it as negative. Additionally, 31 percent of Houston entrepreneurs say they’re concerned about climate change affecting their business.

Houston entrepreneurs take steps to protect their business

Unexpected or major economic events can transform a business in the blink of an eye — a lesson Houston business owners learned all too well in the wake of Hurricane Harvey. The majority of Houston entrepreneurs are taking steps to protect their business from potential threats such as natural disasters, an economic downturn or a cyber breach. However, most Houston business owners do not have a plan to address reputational crises or challenges.

  • Seventy percent have a business continuity plan in case of a flood, fire or other disaster (highest percentage nationwide).
  • Seventy-six percent have taken steps to protect their business in case of an economic downturn.
  • Eighty-eight percent have taken at least one step to protect customer data from a cybersecurity breach (highest of all 10 markets surveyed).
  • Only 35 percent have a plan to manage reputational issues and threats.

The power of posts — are online reviews more of a trust broker or breaker?

Customer feedback holds tremendous sway in the digital era, with online reviews serving as a powerful channel for sharing both compliments and criticisms. While 61 percent of Houston business owners have received a negative online review of their business, 56 percent believe positive reviews matter the most, compared to 44 percent who say negative reviews have a greater impact.

Furthermore, 64 percent say reviews are important to the success of their business, with 75 percent reporting that positive reviews have helped generate business opportunities. Recognizing that negative reviews do have an impact, 70 percent of Houston business owners who have received one say they respond as soon as possible to limit the reputational damage.

For a complete, in-depth look at the insights of the nation’s small business owners, read the spring 2019 Bank of America Business Advantage Small Business Owner Report. For additional insights, download the Small Business Owner Report infographic.

5/10/19


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