Small businesses keep America going — accounting for nearly half of U.S. jobs — but what keeps small businesses going? That’s the question behind the annual SunTrust survey of small business owners. Conducted in March 2018, the survey asked 532 business owners what they thought about the current business environment and what their priorities are for 2018.
The key takeaways and trends?
Small business owners are optimistic about the economy and about growing their businesses. To promote growth, businesses are planning to invest in marketing and social media activities.
Small business owners are feeling more positive about the national economy in 2018 than they did in 2017. This is especially true of business owners with revenues of $100K up to $250K. Among this group, the number who said the economy was extremely/somewhat strong rose by 21 points (from 43% to 64%). Higher levels of confidence are attributed to increased business activity and tax reform.
Despite greater financial confidence, many business owners continue to feel business-related stress. Nearly six in ten (57%) are extremely/somewhat stressed about their businesses due to issues such as costs, economic uncertainty and the political climate.
To take advantage of positive economic conditions, business owners say they will invest in key areas they need to improve in, like marketing to profitable niches (38%) and expanding their social media and online presence (33%).
Managing cash flow — the inflow and outflow of money — is an important business activity because it helps ensure a small business has enough money to pay for key expenses when needed. So it’s no surprise that in our 2018 small business survey, controlling cash flow was the third most important financial priority for businesses after growth and profitability.
Within the subject of cash flow management, building a cash reserve is the most important improvement goal for small business owners, with 88% of those surveyed saying that having a cash reserve is important and 44% saying they need to improve in that area. Similarly, 88% also said monthly cash flow monitoring was important, but fewer businesses need to improve at that task (32%). Other cash-related priorities for small businesses include better receivables collection and increasing the use of electronic payments for their businesses expenses.
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Growth activities, including business planning and lining up funding sources, are the single biggest financial priority for small business owners in 2018, edging ahead of increasing profitability (2nd) and cash flow management (3rd).
Specifically, small business owners want to do a better job of segmenting markets in order to better target products and services, with 72% saying it is important and 41% saying they need to improve in this skill area. Goal setting is another important competency that 86% of owners see as beneficial and 40% plan to work on.
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Boosting profitability is a must for any business — and for small business owners, it’s a top two financial priority, ranking just behind growth as one of the owners’ biggest concerns.
So how do small businesses plan to increase profitability? The owners surveyed indicated that refining their time management skills and honing their business’s marketing strategies are the main actions they are taking to increase profitability. Other areas of focus are financial planning and competitive analyses. However, owners resoundingly agree the single most important way to increase profitability is to control expenses, with 93% saying it is important and 58% indicating they already do well at controlling costs.
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Of the business priorities covered in the survey, asset protection was the one small business owners were most confident about. In fact, nearly two-thirds said they are doing well in:
However, many small businesses still have work to do in security and fraud protection. Fraud in particular is a prevalent concern among business owners, with most reporting they actively monitor and reconcile bank accounts on a regular basis — even though few have actually experienced fraud in the last 2 years.
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