While economic uncertainty persists, there are signs that many entrepreneurs feel more confident and less stressed this fall. According to the latest findings of the American Express OPEN Small Business Monitor, just 20 percent believe economic conditions are the biggest barrier to growth (compared to 23% in the fall of 2011), fewer have cash flow concerns (53%, versus 58% in the spring) and fewer are stressed out by the economy (59%, versus 64% in the spring).
Small business owners’ top priority, is maintaining their current business and sources of revenue (32%) and, as a result, they have adopted a “wait and see” approach for growth plans. Only 29% of businesses surveyed have plans to hire new employees, down from 35% in the spring. However, only 16% of entrepreneurs say the economy has caused them to lay off employees versus 21% six months ago.
In sharp contrast, a small cadre of “high achievers” is taking action and focusing on growth, among this group two-thirds (66%) plan to hire over the next six months.
“In many ways, our research on small business sentiment mirrors economic indicators on the consumer front — confidence and optimism gauges are showing positive signs, but there is a sense that people are not willing to go all-in until after the elections,” said Susan Sobbott, president, American Express OPEN.
“To help small business owners navigate this uncertain time, we decided to zero in on the small businesses that weathered the great recession and came out firing on all cylinders — we want to know ‘what can be learned from the high achievers that will help create of more of them?’”
AMEX says: New index uncovers key areas of business differentiation
For the first time, the semi-annual survey, now in its eleventh year, includes a Success Index to identify commonalities across successful businesses that can provide lessons for any small business.
The Success Index was developed based on self-reported responses to questions regarding business growth and characteristics correlated with high-performing entrepreneurs.
Based on a 100-point scale, four distinct levels emerged: “Strugglers” (scoring between 0-40 points), “Sustainers” (scoring between 41-60 points), “Strivers” (scoring between 61-80 points) and “High achievers”, who scored highest on the Index (between 81-100 points).
High achievers represent 6 percent of the total survey sample, and on average, have spent 26 years in business, employ 18 people in their firms and have attained business growth of 34 percent over the last three years (versus 10% growth for the total survey population).
A comparison between the high achievers and the total survey group uncovers a host of key differentiators:
- They take more risks: More than two-thirds have increased their appetite for risk compared to one year ago (67%, versus 35% of the total population)
- They don’t just plan for growth, they make it a priority: A majority of high achievers say they are planning to grow their businesses over the next six months (93%, versus 69% of the total survey group) and more than half (51%) have growth as their top priority (versus 31% of the total survey group)
- They invest in their business: More than three-quarters (78%) are planning to make capital investments (versus 49% of the total survey group)
They leverage social media:
Seven in 10 use social media (70% versus 49% overall)
More than three quarters (79%) use social media to attract new customers (versus 57% overall)
They provide incentives to customers to get repeat business:
Eighty-four percent are placing heightened focus on better servicing customers to set their business apart from competitors (versus 78% overall);
Forty percent offer loyalty rewards (versus 22% overall); and
Forty-one percent offer differentiated products or services (versus 23% overall)
Noteworthy Pennsylvania business owner highlights are as follows:
- More than eight in 10 (83%) say the economy stresses them out, up dramatically from (62%) the spring.
- More than eight in 10 (81%) plan to grow their businesses over the next six months, up dramatically from (66%) this spring.
- Sixty-four percent owners pay themselves a salary, up dramatically from 47 percent last fall. On average they earn $69,600 per year, up from $58,000 a year ago.
- Sixty-one percent use social media for their business.
- More than half (52%) feel confident they can access the capital they need to grow their businesses, down dramatically from (72%) this spring.
- Given their business performance over the last three months, more than one third (37%) would say the economy is stagnant.
- Just 5 percent (vs. 6% overall and 3% in Northeast) are “High achievers”, who scored highest on the Small Business Index, between 81-100 points.