Resiliency fueled by the entrepreneurial spirit of small and medium-sized businesses
RALEIGH, N.C. — The sixth annual First Citizens Bank Small Business Forecast has found that despite widely accepted uncertainties as a result of the coronavirus pandemic, many small business owners remain optimistic about the economic outlook for two to three years. Of those polled, 66% of respondents are optimistic or very optimistic for the long-term economic outlook, which remains on par with pre-pandemic sentiment from 2019 (68%).
“This year has been challenging and unpredictable for the world, but our report shows that small business owners have not let the challenges of today impact their positive perception about our economic outlook,” said Doug Sprecher, director of sales strategy at First Citizens Bank. “The small business community shoulders a significant amount of responsibility and has continued to showcase its resiliency year-after-year. Our goal is to leverage this data to better equip business owners with the insights and counsel needed to plan for and achieve greater business performance in 2021 and beyond.”
When compared to the near-term economic confidence, small business owners are less confident in the conditions for the next 12 months. Of those surveyed, 57% reported being confident or very confident in the United States’ near-term economic conditions. This is a significant decline from 2019, where 66% of respondents felt confident about the immediate economic outlook.
Businesses with a history of less than 10 years (77%), those with more than 51 employees (86%) and business owners ages 18-34 (89%) are most confident in their ability to grow. This year, small business owners in California showed the steepest decline in near-term economic confidence with 49% (a 24% decrease from 2019) stating they were very or somewhat confident. Conversely, the outlook of their counterparts in Wisconsin (64%) and South Carolina (65%) remained relatively flat in year-over-year response to near-term economic conditions, indicating a steady confidence level about small business owners in these regions.
Even with a decline in confidence over the next 12 months, the survey has found the entrepreneurial spirit of small business owners indicates continued resiliency. Although 67% said their business has been negatively impacted by COVID-19 and 79% feel personally responsible for the financial stability of their employees, small business owners reported having more confidence in their ability to grow their business in 2021 (69%) than they do in the overall economic outlook for the U.S. (57%). Of those planning to grow and expand their business in the next 6-12 months, 44% indicated they will do so by hiring more employees and 26% noted investments in technology.
Other findings include:
- Overall, business owners’ perception of being successful or very successful during the past year declined significantly from 76% in 2019 to 69% in 2020. Florida (64%) and Wisconsin (64%) showed the sharpest decline in business performance with a difference of 18% and 23% respectively from 2019. North Carolina’s (69%) perception of business success remained stable year-over-year.
- The ongoing COVID-19 pandemic is considered very concerning by 51% of business owners and registers as the most prevalent concern impacting their ability to meet business goals in the next year.
- Building brand awareness through general marketing is the top growth strategy among respondents (43%). Other strategies include increasing current customer satisfaction and loyalty (37%), creating new products and services (26%) and researching and identifying new customer opportunities (33%).
- Local loyalty continues to drive positive sentiment, with 72% of all respondents in all five markets agreeing that the state where their business is located is a great place to start a small business. By state, the percentage of respondents agreeing their state is a great place to start a business are: California (61%), Wisconsin (66%), North Carolina (72%), South Carolina (84%) and Florida (80%).
- Banks are facing stronger competition from non-traditional funding sources. In 2020, 43% of respondents plan to seek funding in the next 6-12 months, with the top funding sources being business credit cards (33%), online payment companies (16%), loans from vendors (20%), social media (17%) and venture capitalists/angel investors (11%).
The First Citizens Bank Small Business Forecast is conducted annually in California, Wisconsin, Florida, South Carolina, and North Carolina to assess the motivations, sentiments and success of U.S. small business owners.
About First Citizens Bank
Founded in 1898 and headquartered in Raleigh, N.C., First Citizens Bank is one of the largest family-controlled banks in the U.S., with offices in 19 states. For more information, visit firstcitizens.com/small-business.