Small Businesses are Anticipating a Slower 2016 Holiday Season
Study finds business owners are concerned about year-end sales, but have a more positive outlook on 2017
McLean, Va. (December 13, 2016) – Small business owners are preparing for weaker sales this holiday season, with only 23 percent expecting an increase in sales – down from 29 percent a year ago. Capital One's latest Spark Business Barometer, a national study of small businesses tracking financial conditions, economic perceptions, hiring plans and other indicators of small business growth, revealed smaller businesses (with under $1 million in annual revenues) are driving the negative outlook, feeling less optimistic about holiday sales compared to their larger counterparts and competitors.
Despite the dip in holiday sales expectations, small business sentiment overall seems to be improving. Forty-nine percent of business owners reported "good" or "excellent" business conditions in their area heading into 2017 – an increase of eight points compared to the first half of 2016 (41 percent) and slightly above average (48 percent) since the Barometer began tracking business conditions in 2013. Twelve percent of small business owners believe their financial position will be "much better" in the next six months - up three points from earlier this year.
"It is encouraging to see many businesses improving their outlook about the future, after a brief dip in confidence earlier this year. While concerns related to costs and regulations still exist, we are glad to see that optimism is on the rise," said Buck Stinson, Head of Small Business Card at Capital One. "At Capital One, we're committed to understanding the trends and challenges impacting businesses, so we can deliver solutions that fuel small business growth."
The latest survey also found one-third of small business owners reported better financial positions compared to 12 months ago, slightly up from Q3 2015 (31 percent). The latest findings are six points below the historical average of 39 percent since the Barometer began tracking sentiment in 2011 and remains steady compared to Q4 2012 during the last election cycle.
Capital One's Small Business Confidence Score
In Q4 2016, business owners reported feeling more optimistic compared to the first half of 2016, and are on track to reaching the highest levels measured 2014 and 2015. Capital One's Small Business Confidence Score is an analysis of small business sentiment data collected by the Spark Business Barometer, looking at economic sentiment, hiring plans, recent sales and future financial positions.
*The Capital One Small Business Confidence Score evaluates responses to a series of questions from the Spark Business Barometer and ranges from -100 (very low confidence) to +100 (Very High Confidence).
The following are additional highlights uncovered in the fall 2016 Spark Business Barometer survey:
Small business optimism is back on track.
Businesses overall are expecting weaker holiday sales, but larger businesses tend to be more optimistic.
Business owners cite taxes as their top concern for 2017.
Businesses are hesitant to grow.
Most small business owners still do not offer retirement plans.
Business owners are not fully capitalizing on marketing and e-commerce opportunities.
The following presents a summary of the methodology used to execute Capital One's Fall 2016 Small Business Barometer Survey, conducted by the market research and business intelligence firm ORC International. For this telephone study, ORC interviewed a national sample of 400 for-profit small businesses in the US. Small businesses are defined as those with total annual revenues less than $10 million. Interviews were conducted from September 29-October 13, 2016. One respondent per business was interviewed. The margin of error is +/- 4.9 percent at a 95 percent confidence level.
The initial sample for this study was constructed using a random selection from the extensive business database maintained by Infogroup, Inc., and drawn to be representative of qualifying small businesses throughout the U.S. by industry, region and employee size. To compensate for variation in response rate among different types of businesses, final data was weighted by region and industry to help ensure the final results were proportionally representative of the small business population. In developing the weighting frame, ORC International considered the impact on comparability with prior waves of the study.
About Spark Business
Capital One® offers a broad spectrum of financial products and services to consumers, small businesses, and commercial clients. Spark Business from Capital One comprises a suite of innovative products and services specifically designed for small business, including credit cards with unlimited rewards, no-fee checking and savings, and secure and flexible merchant service offerings. Spark Business provides tips, resources, and inspiration to help your business thrive at www.SparkBusinessIQ.com. For more information, visit www.CapitalOne.com/smallbusiness.
Contact: Alison Cahill