2018 u.s. bank small business annual survey · small business market overall, though the smaller...
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![Page 1: 2018 U.S. Bank Small Business Annual Survey · small business market overall, though the smaller the business, the greater the likelihood of banking with a smaller bank. Regional](https://reader034.vdocuments.us/reader034/viewer/2022042312/5eda6146b3745412b5713f15/html5/thumbnails/1.jpg)
Market research firm LRW conducted the online survey of 2,737 qualified small business owners across 25 states. Businesses needed to have
less than $10 million in annual revenue, with half of the respondents having under $200,000. The margin of error is less than2 percent on
national results. Deposit products offered by U.S. Bank National Association. Member FDIC. U . S. BAN K
2018 U.S. Bank Small
Business Annual Survey
National Results
Prepared by LRW
March 2018
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2U . S. BAN K
Market research firm LRW conducted the online survey of 2,737 qualified small business owners across 25 states. Businesses needed to have less than $10 million in annual
revenue, with half of the respondents having under $200,000. The margin of error is less than 2 percent on national results. Deposit products offered by U.S. Bank National
Association. Member FDIC.
Business Context and Project Overview
U.S. Bank conducts an annual study to
understand the small business owner market, specifically, SBOs’ perceptions of the state of the
economy, their business, and other topical areas. U.S. Bank will use the results for internal strategy
development and PR releases to demonstrate thought leadership.
NOTE ON TRENDABILITY
In 2018, the team changed research partners to
improve the speed and quality of insights and storytelling for PR purposes. Questionnaire
changes were made that improved data quality and allow for deeper insights. Though this is the
9th edition of the Small Business Survey, these changes limit trendability against previous waves.
Moving forward, 2018 will be used as a benchmark to trend against for future waves.
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3U . S. BAN K
Market research firm LRW conducted the online survey of 2,737 qualified small business owners across 25 states. Businesses needed to have less than $10 million in annual
revenue, with half of the respondents having under $200,000. The margin of error is less than 2 percent on national results. Deposit products offered by U.S. Bank National
Association. Member FDIC.
Understanding the Small Business Landscape
WE ASKED…
How do small business
owners feel about the
economy, their business
banks, employment
conditions, payments and
credit cards, business ethics,
and tax policy?
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4U . S. BAN K
Market research firm LRW conducted the online survey of 2,737 qualified small business owners across 25 states. Businesses needed to have less than $10 million in annual
revenue, with half of the respondents having under $200,000. The margin of error is less than 2 percent on national results. Deposit products offered by U.S. Bank National
Association. Member FDIC.
Survey Approach
APPROACH
15-minute survey
Conducted 100% online, all devices allowed
2,737 respondents in 25 states Detailed results gathered for Arizona, N.
California, S. California, Colorado, Illinois,
Minnesota, Missouri, Ohio, Oregon, Washington
and Wisconsin
Oversample for Asian, African American, Latino
and LGBT-owned small businesses (results to be
released at a later date)
QUALIFICATIONS
Employed – full-time, part-time, or self-employed
Business owner with business revenue under $10 million
Financial decision maker for business –solely responsible or share responsibility
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5U . S. BAN K
Market research firm LRW conducted the online survey of 2,737 qualified small business owners across 25 states. Businesses needed to have less than $10 million in annual
revenue, with half of the respondents having under $200,000. The margin of error is less than 2 percent on national results. Deposit products offered by U.S. Bank National
Association. Member FDIC.
Key takeaways
• Small business owners are happy, doing better this year than last, and
expect growth in revenue and company size next year.
• The third of business owners who have exit plans mostly look to transfer
to family or dissolve the business. Most feel confident about a successful
transition within the next 10 years.
• Small business owners’ concerns around financing have created an
environment where cash resources and credit cards are used more often;
top reasons for investment are equipment, marketing, and inventory.
• Though ethical issues are uncommon, small business owners value
ethical behavior and enforce it themselves.
• Small business owners aren’t stressed about tax reform.
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6U . S. BAN K
Market research firm LRW conducted the online survey of 2,737 qualified small business owners across 25 states. Businesses needed to have less than $10 million in annual
revenue, with half of the respondents having under $200,000. The margin of error is less than 2 percent on national results. Deposit products offered by U.S. Bank National
Association. Member FDIC.
Economic Outlook
54%NATIONAL
70%COMPANY
62%INDUSTRY
57%LOCAL
They are optimistic about…
The challenge of economic uncertainty is at an all time low; a majority of business owners are loving what they do and are optimistic at both company and industry levels. Optimism is particularly high for small businesses with higher revenue and more employees.
Most small businesses increased or maintained revenue since last year, a slight drop from reported revenue growth in 2017*. Many, including newly established businesses, expect even further revenue and profit growth in the upcoming year.
Love what they do
54%
26%
17%
16%
17%
11%
Economic Uncertainty
2018
2017
2016
2015
2014
3 in 5 expect further
economic growth in the
coming year.
$
72%
80%
78%
82%
81%2018
2017
2016
2015
2014
Increase or
maintained
revenue since
last year
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7U . S. BAN K
Market research firm LRW conducted the online survey of 2,737 qualified small business owners across 25 states. Businesses needed to have less than $10 million in annual
revenue, with half of the respondents having under $200,000. The margin of error is less than 2 percent on national results. Deposit products offered by U.S. Bank National
Association. Member FDIC.
Employment ConditionsAlmost all expect to maintain or grow their business in the upcoming year.
Motivate employees using:
37%37%
Monetary bonuses
27%
24%
21%
20%
16%
15%
14%
Flexible hours
Company culture
Office environment
Monetary bonuses
Education reimbursement
Retirement plan contribution
Overtime pay
Attract talent using:
1 in 10 are
concerned about
limited talent
This positive outlook is resulting in business stability and expansion, with most business owners planning to maintain or increase the size of their workforce in the coming year. Larger businesses expect to grow even further – a reflection of their high optimism.
While some plan to increase compensation for current employees, soft benefits are becoming the preferred method for attracting and retaining talent. This is helping to mitigate any concern about limited candidates while allowing for financial growth.
97%
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8U . S. BAN K
Market research firm LRW conducted the online survey of 2,737 qualified small business owners across 25 states. Businesses needed to have less than $10 million in annual
revenue, with half of the respondents having under $200,000. The margin of error is less than 2 percent on national results. Deposit products offered by U.S. Bank National
Association. Member FDIC.
Access bankaccounts
Accept payments Make payments
56% 47% 46%
7 in 10Have high trust
in
banking
technology
Technology
Trust in banking technology is high and small business owners have a general desire for omni-channel flexibility.
Though fewer small business owners are on the lookout for technology for their own business, many expect their banks to stay up-to-date with financial service technology. Ease of access to accounts, along with the convenience of making/accepting payments are particularly valued tools. The larger the business, the greater the value reaped from technology integration.
1 in 2Feel their bank needs to
be up to date with
financial service
technology
Technology of High Value
1 in 5are always looking for
new technologies to
help run their business
40%
Top Need from Business Bank
Enabling
banking
through
multiple
channels
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9U . S. BAN K
Market research firm LRW conducted the online survey of 2,737 qualified small business owners across 25 states. Businesses needed to have less than $10 million in annual
revenue, with half of the respondents having under $200,000. The margin of error is less than 2 percent on national results. Deposit products offered by U.S. Bank National
Association. Member FDIC.
9%
37% 31%
16%7%
1 year or less 2-5 years 6-10 years 11-20 years 21 years or more
Succession Planning
Timing for Exit Plan
A third of small businesses have succession plans. Though sole proprietors and lower revenue businesses more often look to dissolve the business, transferring or selling to a family member is the most common outcome overall; this results in high confidence for a successful transition.
Most SBOs with succession plans plan to exit within the next 10 years. Older business owners who have greater confidence in transitioning their business look to exit sooner than younger owners.
Two thirdsDon’t have an
exit plan in
place
2 in 3Who have an exit plan feel
confident about
transitioning
27%
26%
Transfer/sell to
a family member
Dissolve the
business
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10U . S. BAN K
Market research firm LRW conducted the online survey of 2,737 qualified small business owners across 25 states. Businesses needed to have less than $10 million in annual
revenue, with half of the respondents having under $200,000. The margin of error is less than 2 percent on national results. Deposit products offered by U.S. Bank National
Association. Member FDIC.
vs. 2017
Large Bank (National) -4
Statewide or Regional Bank +4
Local Community Bank -2
Credit Union +2
Banking Relationships
Branch Banking
8 in 10Report they expect to do some of their banking at physical branch in 5 years (vs. 88% in 2017)
Larger banks continue to dominate the small business market overall, though the smaller the business, the greater the likelihood of banking with a smaller bank.
Regional banks have seen the greatest growth in the small business market since last year. Business owners look to their banks to be ethical, transparent, and to understand their business.
Small business owners value in-person interactions for problem resolution. Strong relationships and trust also drive owners of larger businesses to visit the branch.
4 in 10
want the option to talk with someone in person if there is a problem
Type of Primary Business Bank
48%
19%
18%
12%
Top Banking Needs
32%Demonstrating ethical
behavior
31%Knowing me and
my business
31%Dealing in a
transparent straightforward
manner
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11U . S. BAN K
Market research firm LRW conducted the online survey of 2,737 qualified small business owners across 25 states. Businesses needed to have less than $10 million in annual
revenue, with half of the respondents having under $200,000. The margin of error is less than 2 percent on national results. Deposit products offered by U.S. Bank National
Association. Member FDIC.
Credit Cards And Payments
While check or cash are most widely accepted, most businesses accept multiple forms of customer payment. Chip cards and magnetic stripes are the most common POS systems used for debit/credit transactions, though the increased desire for technology in banking has brought rise to new “contactless” debit/credit methods, particularly for sole proprietors.
As business credit cards are used often, rewards programs play an important role in their use for small business owners.
Use of Business Credit Card
Point-of-Sale Systems Used
52%
Magnetic
Stripe
56%
Chip card
36%
Contactless
mobile
capable
Feel that Business
Credit Card Rewards are important 8 in 10
3.1Customer payment
methods accepted
76%67%
Check Cash
74% have a
business credit card
53% use it at least
weekly
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12U . S. BAN K
Market research firm LRW conducted the online survey of 2,737 qualified small business owners across 25 states. Businesses needed to have less than $10 million in annual
revenue, with half of the respondents having under $200,000. The margin of error is less than 2 percent on national results. Deposit products offered by U.S. Bank National
Association. Member FDIC.
Financing and Expenditure
Though a minority of small businesses expect to increase their capital expenditure in the next year, this is most common in businesses with more employees. However, around half of SBOs are still considering financing. Equipment, marketing, and inventory are the top small business expenses that call for financing support.
Given their high penetration, business credit cards, along with personal funding, are top sources for financing. Despite the ease of access to these sources, only 2 in 5 find it easy to borrow money, indicating an opportunity to deliver on an unmet need within the category.53%
Cash Resources /
Personal Funding
Financing Sources
1 in 2 are considering
financing in the next year
45%Business
Credit Cards
17%Buying/
repairing equipment
13%Purchasing
inventory
13%Marketing
1 in 4Expect to increase capital
expenditure in the coming year
2 in 5Find it easy to borrow money
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13U . S. BAN K
Market research firm LRW conducted the online survey of 2,737 qualified small business owners across 25 states. Businesses needed to have less than $10 million in annual
revenue, with half of the respondents having under $200,000. The margin of error is less than 2 percent on national results. Deposit products offered by U.S. Bank National
Association. Member FDIC.
Ethical Behavior
Business owners recognize that the customer is the key to success, and as such, ethical behavior is critical, especially when it comes to hiring new talent.
Although ethical issues are uncommon, when they do occur, lawyers and/or business partners are likely to be consulted. As ethical issues are relatively more prevalent among larger businesses, these SBOs seek out advice from multiple sources.
However, it’s important to note that business owners, themselves, are in-charge of implementing the actual strategy to promote ethical behavior.
Importance of Ethical
Behavior in Hiring
Sources of Assistance for
Ethical Issues
Ethical Conduct Enforced by Owner
Only 1 in 10 small
businesses have faced
an ethical issue in the
past year
56%Feel the key to business success
is understanding the customer
93%
46%Attorney
16%Business
partner/investor
68%
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14U . S. BAN K
Market research firm LRW conducted the online survey of 2,737 qualified small business owners across 25 states. Businesses needed to have less than $10 million in annual
revenue, with half of the respondents having under $200,000. The margin of error is less than 2 percent on national results. Deposit products offered by U.S. Bank National
Association. Member FDIC.
Tax Policy
7 in 10 Have an optimistic economic
outlook for their company
19%
30%
37%Positive impact
No impact expected
Negative impact
Few small business owners expect a negative impact from recent tax policy reform. On the contrary, the expected positive impact is resulting in an overall optimistic outlook for businesses.
Very few misunderstand the impact of policy reform on their business, and economic uncertainty represents less of a challenge than ever.
15% are unsure of the impact
on their business
11% see economic uncertainty
as a challenge to their business
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15U . S. BAN K
Market research firm LRW conducted the online survey of 2,737 qualified small business owners across 25 states. Businesses needed to have less than $10 million in annual
revenue, with half of the respondents having under $200,000. The margin of error is less than 2 percent on national results. Deposit products offered by U.S. Bank National
Association. Member FDIC.
Top Needs
Implications: Meeting Business Owner Needs
Owners are looking to their business bank to simplify fee structures and also to know who they are and to be a trusted advisor.
Technology around account access and payment capabilities are valued the most, and are therefore of particular importance.
Owners also value effective problem resolution at branches, reinforcing the benefit of building lasting relationships.
Needs
Technology
Enables me to bank through
multiple channels40%
Demonstrates ethical
behavior32%
Knows me and my business 31%
Deals in a transparent
straightforward manner31%
Unmet Needs
Nothing, as my business
bank provides me with everything I need
46%
Simplifies fee structure 10%
Helps with my business
succession/exit strategy9%
Provides financial advice 9%
56%
Access bank
accounts
47%
Accept
payments
46%
Make
payments
43%
Want the option to talk with someone in person if there is a problem
51%
Feel their bank needs to be up to date with financial service technology
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16U . S. BAN K
Market research firm LRW conducted the online survey of 2,737 qualified small business owners across 25 states. Businesses needed to have less than $10 million in annual
revenue, with half of the respondents having under $200,000. The margin of error is less than 2 percent on national results. Deposit products offered by U.S. Bank National
Association. Member FDIC.
53%Cash Resources /
Personal Funding
Implications: Advice and EducationBanks are infrequently consulted for business / financial advice. However, there is concern about ease of borrowing, indicating opportunity to play an advisory role to small business owners.
There are also knowledge gaps when it comes to financing; most small business owners are using cash and credit cards. Consider education around more beneficial financing options to build greater trust.
As top uses for financing are equipment, marketing, and inventory, indicating that business are focusing on lower cost expansion items instead of large capital expenditures.
1 in 10 turn
to bankers
for business
advice
1 in 4find it difficult
Ease of Borrowing
Financing Sources
Uses for Financing
45%Business
Credit Cards
55%No financing
planned
17%Buying/
repairing
equipment
13%Purchasing
inventory
13%Marketing
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17U . S. BAN K
Market research firm LRW conducted the online survey of 2,737 qualified small business owners across 25 states. Businesses needed to have less than $10 million in annual
revenue, with half of the respondents having under $200,000. The margin of error is less than 2 percent on national results. Deposit products offered by U.S. Bank National
Association. Member FDIC.
Summary
Key insights Digging deeper
EconomicOutlook
SBOs are more optimistic about their local view (i.e.,
their company and industry) than the overall economy. At a wider view, perceptions of state versus national
conditions differ by state.
Optimism at all levels of the economy is particularly
strong for large and high-revenue businesses.
Business Profiling
Banks are infrequently consulted for business /
financial advice. There is concern about ease of borrowing, indicating opportunity to educate SBOs on
more beneficial financing options, which in turn can
encourage perceptions of banks as trusted advisors.
Because new, large, and high-revenue businesses
expect an increase in credit needs in the next year, they may have the greatest receptivity towards
communications and education coming from financial
institutions.
Technology / Social Media
Technology has the greatest value for payment
methods and account access in the small business market. Facebook is the most used and most effective
social platform.
New and large businesses are more receptive to
integrating technology and social media into their strategy.
SuccessionPlanning
Transferring or selling / dissolving the business are top
outcomes of SBOs’ exit plans and a third of the market currently has an exit plan.
Different firmographic profiles have different needs
when it comes to succession planning – large, high-revenue businesses look to transfer, while smaller,
lower revenue businesses plan to dissolve.
OwnerAttitudes
Most SBOs have passion for what they do, and believe
that understanding the customer is key to succeeding as a small business. Most are risk-averse, don’t
connect with other SBOs, and don’t seek out
technology solutions for their business.
Larger businesses are more established, while newer
SBOs look to grow their business – they seek out new technology, connect with others, and are more willing
to take risks.
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18U . S. BAN K
Market research firm LRW conducted the online survey of 2,737 qualified small business owners across 25 states. Businesses needed to have less than $10 million in annual
revenue, with half of the respondents having under $200,000. The margin of error is less than 2 percent on national results. Deposit products offered by U.S. Bank National
Association. Member FDIC.
Summary
Key insights Digging deeper
Banking Relationships
There is room to improve on helping SBOs with their
banking needs to build greater trust by simplifying fee structure, improving the in-branch experience, and
staying up-to-date with technology.
Satisfaction with their business bank is lower for sole
proprietors than other business sizes. Sole proprietors have greater trust in face-to-face transactions, so in-
branch experience is critical for this group.
Employment Conditions
Small businesses are focusing on increasing
compensation for current employees, while opting for “soft” benefits to motivate and attract talent to grow
the business.
Large and high-revenue businesses that are most likely
to grow in size and most concerned about candidates use more benefits to motivate and attract talent.
Business Credit Cards /
Payments
Rewards programs associated with business credit
cards are important. Small businesses typically accept multiple forms of customer payment, with newer POS
technology being increasingly adopted.
There is opportunity to capture small and lower
businesses who don’t have business credit cards through rewards programs. Though large businesses
accept more types of customer payments overall, credit
and debit methods are most prevalent.
EthicalBehavior
Though ethical issues are relatively uncommon, ethics
plays an important role in small businesses. Interaction with clients is the area where these issues
are most prevalent.
Large business owners use more sources to support
with ethical issues and are likely to have a dedicated role promoting ethical behavior because they
experience more ethical issues.
TaxPolicy
Many SBOs expect a positive impact to their business
as a result of recent tax policy reform.
The smaller the business, the lower the expectation of
positive impact from tax policy reform. Opportunity exists to educate and guide these SBOs who are less
optimistic about the impact.