Forty-three percent of small business owners consider business conditions to be positive, according to the latest Citibank small business survey. This is a significant increase since August 2010, when 24% of small business owners surveyed reported overall positive business conditions.
One-third (33%) of respondents said their own business is better than it was a year ago – up from 26% in January. Another 33% expect their business will grow by more than 10% this year.
“Small business owners risk everything to pursue their dreams and are willing to do what it takes to make it,” said Maria Veltre, Managing Director, Citi Small Business. “Their personal sacrifices, passion and ability to adapt have positioned them to capitalize on improving business conditions.”
NECESSITY: THE MOTHER OF REINVENTION
A majority of respondents (53%) say they have reinvented their business “to stay afloat or competitive.” This strategy is reinforced in the current competitive climate that 38% of respondents describe as “extremely intense.”
“Small business owners are especially adept at reinvention – whether because of obstacles or new visions for growth,” Veltre said. “Change is never easy, but neither is starting and running a business. We see our small business clients embracing change and reinventing themselves to secure a rewarding future.”
As part of the reinvention process, small business owners say they focused on overhauling the products or services they offered (47%). This was followed by adjusting their infrastructure, such as technology or staffing (24%) and beefing up their sales and marketing (18%). A small amount (7%) said they reduced pricing and took less profit. Only 3% relocated.
If small business owners aren’t reinventing their business, they stay sharp and evolve to keep up with the competition. The following steps were cited as ways they kept business thriving:
- 88% kept updated and knowledgeable about their field
- 70% increased face time with customers
- 67% updated/upgraded computer systems
- 52% increased their use of the internet and social media
- 51% built a network of suppliers and partner companies
Regarding the steps they plan to take during the remainder of 2012:
- 65% expect to increase marketing
- 56% will work to get better pricing on expenses
- 52% expect to work even longer hours
- 50% will introduce new products or services
- 49% will use social media, such as Facebook or Twitter, to market their business.
“Small business owners should consider these steps as a check list for growth and survival,” said Veltre. “Never one to sit idle, a small business owner continually invests in change in order to stay relevant.”
Part of that reinvention comes from spending, as proven by 38% of respondents who increased the amount they spent on capital investments like computer, inventory and facilities over the past 12 months. Their top two sources of funding have been revenue and profits (75%) and personal savings (62%).
PERSONAL SACRIFICE EARNS APPRECIATION FROM EMPLOYEES AND COMMUNITY
The past few years have taken a personal toll on small business owners: 63% say the major challenge they face owning or running a business was personal stress and being accountable for everyone and everything, second only to the general state of the economy (66%).
Despite overall optimism, small business owners report making significant sacrifices to keep their businesses going and growing over the past few years. Not only did 78% take less profit to support the business at some point in the past, 66% did so to pay employees rather than reduce staff. A significant majority (70%) also say they worked more hours than usual, often sacrificing family time and missing vacations.
In addition to using their own money to help their business survive (69%), the majority of small business owners (54%) say they have gone without a paycheck. Looking back over the history of their businesses, almost one-quarter (23%) have gone without pay for one year or more.
Specifically, 80% of small business owners believe their employees appreciate the sacrifices they made to keep their businesses operating. Demonstrating true commitment, employees showed thanks by their own investment in the success of the company:
- More than one-third (38%) of owners say their employees worked additional hours without pay;
- Another 18% credit their employees with voluntarily missed or delayed paychecks.
To show their own appreciation of employees, small business owners offer additional time off (78%), a bonus (74%) or a raise (70%).
Customers, too, appreciate the stress and sacrifice of running a company. Almost seven in ten (69%) survey respondents say their customers recognize and appreciate their sacrifices. Even more (87%) say they have been thanked by customers.
“The level of appreciation shown to small business owners by employees and customers is uplifting,” said Veltre. “We encourage everyone to thank their favorite small business owner. Small business is a highly personal undertaking; to the small business owner a simple, personal gesture of appreciation goes a long way.”
About the Survey
This Citibank survey was conducted via telephone May 1, 2012 – May 18, 2012 by Abt SRBI Research and Public Affairs among a national random sample of 750 small business owners/operators, age 18 and older throughout the United States. Oversample interviews were conducted in New York (200 interviews) and California (200 interviews) markets. The margin of error for the national sample is approximately +/- 3.58% and +/- 6.93% for New York and California over samples. Surveys are subject to other error sources as well, including sampling coverage error, recording error, and respondent error.