Small Businesses Continue to Face Challenges, but are Feeling Better about the Future
Capital One’s Spark Business Barometer Reveals Majority of Small Business Owners Expect Their Financial Position to Improve This Year
The quarterly nationwide survey measuring the economic perceptions and financial conditions of small business owners, as well as the most common trends and challenges facing small businesses today, found nearly half (49 percent) of business owners are optimistic about the national economy over the next 12 months, and more than two thirds (67 percent) feel good about the future of their local economies. Additionally, despite predominantly negative views of current business conditions (with more than half reporting current financial conditions as “fair” or “poor”), 48 percent believe their financial position will improve over the next six months.
“By engaging with small business owners in this quarter’s Barometer and
on our ‘I
Am Small Business Proud’ road trip across America, we’re seeing that
small businesses are optimistic about the future and hungry for new,
innovative ways to build and enhance their companies,” said
The Spark Business Barometer revealed the following key findings:
“It’s interesting to see how confidence in local economies is surpassing that of the national economy, demonstrating the importance of focusing on ‘local’ and ‘small’ and delivering products and tools that cater to their needs,” Gohman said. “At the same time, it’s clear that beyond delivering great products, we must educate small businesses on the best ways to adopt and leverage those products – and help demystify the more complex or technical resources out there, like SBA loans and mobile technologies.”
According to this quarter’s survey results, 38 percent of small businesses increased sales over the past six months (compared to 40 percent of small businesses reporting sales increases over the past six months last quarter). At the same time, the percentage of small businesses reporting declining sales has increased from 18 percent at the end of last year to 26 percent in the first quarter of 2014. Firms in the financial sector (48 percent) and those with primarily national and international customer bases (52 percent) were more likely to report improved sales results.
Capital One asked small business owners nationwide how their current financial situation compares to this time last year. More than one third (34 percent) reported that their firms’ finances are better, while one in five (20 percent) believe their finances are worse. More than four in ten (44 percent) small business owners reported their business finances have held steady over the last year, mirroring results in the previous quarter.
National sentiment about current business conditions remains negative, consistent with results in Q4 2013. The majority (53 percent) of small business owners describe current business conditions as only fair or poor, compared to 44 percent who describe conditions as excellent or good. Firms with a primarily local customer base are more likely to view the current business environment negatively, with 57 percent describing conditions as fair or poor.
After a decline in optimism between Q3 and Q4 of 2013, small business sentiment regarding the national economic outlook is improving. Nearly half (49 percent) of small business owners are optimistic about the national economy over the year, while 44 percent are pessimistic. Optimism is up three percentage points since the previous quarter, while pessimism is down five percentage points. More than two thirds (67 percent) of small business owners are optimistic about the 12-month outlook for the local economy. Since the previous quarter, optimism has increased by 11 percentage points and is particularly strong among minority small business owners (77 percent) and firms in the construction industry (77 percent).
Twenty-four percent of small business owners nationwide leverage applications on smartphones and tablets to help manage their firms on a daily basis, while three out of five (61 percent) small business owners do not use mobile technology. Firms in the transport industry (57 percent) and services industry (28 percent) are more likely to rely on mobile technology to support business operations, while the majority of firms in the retail sector (71 percent) do not leverage mobile technology. One quarter (25 percent) of small business owners cite security concerns and the need to protect sensitive information as their primary issues with mobile business applications.
Given how vital small business success is to both the national and local
economy, Capital One remains committed to understanding the challenges,
trends and perceptions that affect overall performance and day-to-day
operations. Capital One strives to understand the small business
landscape, in an effort to better serve its clients and customers across
the country. Follow along on
The findings reported in this release are from a telephone survey
conducted by the opinion research firm, APCO Insight, the global opinion
research division of communications consultancy, APCO Worldwide. APCO
Insight interviewed a nationally-representative random sample of 400
for-profit small businesses in the U.S., weighted to Dunn and Bradstreet
counts of all businesses nationwide by SIC code, employee size, and
geography. Small businesses are defined as those with less than
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