Bay Area Entrepreneurs Maintain Strong, Steady Business Outlook

Local entrepreneurs are maintaining a positive business outlook this spring, as revenue expectations and hiring plans remained high and consistent over the last six months, according to the spring 2019 Bank of America Business Advantage Small Business Owner Report released on April 30. Meanwhile, Greater Bay Area entrepreneurs are increasingly optimistic about their local economy but unconvinced by the direction of the national economy, reporting concern over several economic issues and mixed views on the impact of last year’s landmark tax reform and trade tariffs.

The report, based on a semiannual survey of over 1,500 small business owners across the country and the Greater Bay Area reveals that:

Bay Area entrepreneurs’ business outlook over the next 12 months holds strong and steady:

  • Seventy-three percent plan to expand their business (vs. 72 percent in fall 2018).
  • Sixty-five percent believe their revenue will increase (vs. 63 percent in fall 2018).
  • Thirty percent plan to hire (vs. 28 percent in fall 2018).
  • Nineteen percent plan to apply for a loan (vs. 20 percent in fall 2018).

While their economic outlook over the next 12 months is mixed:

  • Fifty-three percent believe their local economy will improve (up from 48 percent in fall 2018).
  • Forty-percent believe the national economy will improve (level since fall 2018, and 8 percentage points below the national average of 48 percent).
  • Top economic concerns include the political environment (75 percent), health care costs (68 percent), international affairs (53 percent), stock market (49 percent) and trade tariffs (48 percent).

“Bay Area entrepreneurs are projecting a strong 2019 business outlook but remain concerned about the direction of the national economy,” said Roger Forman, small business Northwest division executive at Bank of America. “Despite this unease, Bay Area business owners are increasingly confident in their local economy and are optimistic about revenue increases in the year ahead.”

Bay Area business owners split on effects of recent policy changes, contemplate impact of climate change

Seventy-five percent of Bay Area entrepreneurs expressed concern about the current political environment (the highest among business owners surveyed in 10 local markets), though they are divided over how major policy issues are directly impacting them. More than half of the Bay Area business owners surveyed say the new tax code has had an impact on their business — with 22 percent reporting that impact as positive. This is down from the 33 percent who anticipated a positive impact one year ago.

Regarding U.S. trade policy, 52 percent say they have been impacted by tariffs, with 23 percent reporting the impact as negative, 17 percent reporting it as mixed and 11 percent reporting it as positive. Additionally, 47 percent of Bay Area entrepreneurs say they’re concerned about climate change impacting their business.

Most Bay Area entrepreneurs take steps to protect their business

Unexpected or major economic events can transform a business in the blink of an eye. While most Bay Area entrepreneurs are taking steps to protect their business from potential threats such as an economic downturn or a cyber breach, only half have a continuity plan in place in case of a fire, flood or other disaster — the lowest percentage nationwide. Additionally, most Bay Area business owners do not have a plan to address reputational crises or challenges.

  • Fifty percent have a business continuity plan in case of an earthquake, flood, fire or other disaster — 11 percentage points below the national average of 61 percent.
  • Sixty-eight percent have taken steps to protect their business in case of an economic downturn.
  • Eighty-two percent have taken at least one step to protect customer data from a cybersecurity breach.
  • Only 26 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 65 percent of Bay Area business owners have received a negative online review of their business, 59 percent believe positive reviews matter the most, and 41 percent say negative reviews have a greater impact.

Furthermore, 69 percent say reviews are important to the success of their business, with 78 percent reporting that positive reviews have helped generate business opportunities. Recognizing that negative reviews do have an impact, 71 percent of Bay Area 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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