Outlook of Small Business Owners by Sector 2016

Estimated reading time: 6 minutes

Key Small Business Sector Highlights

Retail

Most retailers are likely to say growth is the top priority for their business (86%).  However they are least likely to plan to make capital investments (67%) or hire staff (58%) over the next six months, even though they are most confident they would be able to access the funding needed for growth (97%).

Those retailers planning capital investments will invest in computer and systems software/additional software licenses (43%), office furnishings and equipment (21%), manufacturing/production equipment (18%), and real estate investments (11%).

Nearly three quarters of retailers say they invest a substantial amount of personal finances to grow their business (73%).  Nearly all say they invest a significant amount of personal time to grow their business (94%). More than seven-in-ten say they sacrifice time spent with family to grow their business (71%). Two-thirds of retailers (66%) say they spend a larger percentage of time working ON their business to drive growth rather than IN their business managing details.

The primary way they plan to grow their businesses over the next six months is to introduce new products/services (35%) and when asked about the top two most important triggers that could really take their business to the next level, 57% said expanding their product/service offerings while 32% said having access to greater amounts of capital.

The two biggest challenges faced by retailers as they grow their business are uncertain economic conditions (29%) and the rising cost of doing business (27%).  Cash flow is another concern experienced retailers (63%).The greatest cash flow concerns include the ability to accurately track cash flow (18%), having enough cash on hand to win new business (17%), the ability to pay bills on time (16%), accounts receivable (9%) and the ability to meet payroll (3%).

When looking at how they will fund and grow their businesses, 82% identify credit and charge cards as an important tool; 48% see them as a “very important” tool. Given the importance of credit cards as a source of short-term funding, more than three quarters (78%) of retailers who use credit cards for business expenses indicate that an increase in their credit limit would be beneficial to their business. And, among those who have hit their credit limit, nearly two-thirds (63%) have attempted to have it increased.

The nearly three quarters of retailers (73%) who use credit cards for business expenses say credit card rewards are important to their business; 40% say they are ‘very important’ to their business. The rewards that they see as most valuable include cash back (73%), airline miles (32%) and gift cards (26%).

Manufacturing                                                                                                                  

Manufacturers are the most likely to say that growth is the top priority for their business (90%). They are most likely to plan to make capital investments (88%) and hire staff (84%) even though they are the least confident among industries to say that they would be able to access funding for growth (90%).

Manufacturers planning capital investments will invest in manufacturing/production equipment (64%), computer and systems software/additional software licenses (34%), office furnishings and equipment (22%) and real estate investments (21%).

Manufacturers are the most likely to invest personal time/resources and make personal sacrifices in order to grow their business. Nearly nine-in-ten say they invest a substantial amount of their personal finances to grow their business (89%).  Nearly all say they invest a significant amount of personal time to grow their business (96%). Nearly nine-in-ten say they sacrifice time spent with family to grow their business (88%). More than eight-in-ten manufacturers (85%) say they spend a larger percentage of time working ON their business to drive growth rather than IN their business managing details.

The primary way they plan to grow their businesses over the next six months is to introduce new products/services (22%) and when asked about the top two most important triggers that could really take their business to the next level, 42% of manufacturers said expanding their product/service offerings while 38% said expanding the market for their current products and services.

The biggest challenge faced by manufacturers as they grow their business is financing/finding money to expand (27%).  Manufacturers are among the most likely to experience cash flow concerns (91%).  Their greatest cash flow concerns include having enough cash on hand to win new business and accounts receivable (each, 25%), the ability to accurately track cash flow (18%), the ability to meet payroll (13%) and the ability to pay bills on time (9%).

When looking at how they will fund and grow their businesses, 82% identify credit and charge cards as an important tool; 47% see them as a “very important” tool. Given the importance of credit cards as a source of short-term funding, more than eight-in-ten (84%)manufacturers who use credit cards for business expenses indicate that an increase in their credit limit would be beneficial to their business. And, among those who have hit their credit limit, three-quarters (75%) have attempted to have it increased.

The more than eight-in-ten manufacturers (85%) who use credit cards for business expenses say credit card rewards are important to their business; 42% say they are ‘very important’ to their business. The rewards that they see as most valuable include cash back (67%), gas rewards (44%) and gift cards (70%).

Services

More than two-thirds of services business owners say growth is the top priority for their business (71%). Nearly three-quarters plan to make capital investments (72%).  Those planning capital investments will invest in computer and systems software/additional software licenses (52%), office furnishings and equipment (26%) manufacturing/production equipment (16%), and real estate investments (12%).  More than six-in-ten plan to hire staff over the next six months (61%).

Services business owners are among the least likely to invest personal time/resources and make personal sacrifices in order to grow their business. Six-in-ten say they invest a substantial amount of personal finances to grow their business (60%).  More than eight-in-ten say they invest a significant amount of personal time to grow their business (83%). More than two-thirds say they sacrifice time spent with family to grow their business (67%). Just fifty-three percent say they spend a larger percentage of time working ON their business to drive growth rather than IN their business managing details.

While the primary way they plan to grow their businesses over the next six months is to sell more of the same products/services (21%), when asked about the top two most important triggers that could really take their business to the next level, 38% of services business owners said expanding their product/service offerings while 37% said expanding the market for their current products and services.

The biggest challenge faced by services businesses as they grow their business is uncertain economic conditions (19%).  Services businesses are among the least likely to experience cash flow concerns (59%).  The greatest cash flow concerns include having enough cash on hand to win new business (16%), the ability to accurately track cash flow and accounts receivable (each, 15%), the ability to meet payroll and the ability to pay bills on time (each, 7%).

A large majority are confident in their ability to access funding for growth (92%). When looking at how they will fund and grow their businesses, just 64% identify credit and charge cards as an important tool.  Nearly three quarters (73%) of services businesses who use credit cards for business expenses indicate that an increase in their credit limit would be beneficial to their business. And, among those who have hit their credit limit, less than half (49%) have attempted to have it increased.

The more than three quarters of services businesses (77%) who use credit cards for business expenses say credit card rewards are important to their business; 39% say they are ‘very important’ to their business. The rewards that they see as most valuable include cash back (76%), airline miles (37%) and travel discounts (31%).

Survey Methodology                                                                                                                                   

The American Express OPEN Small Business Growth Pulse is based on an online sample of 1,001 U.S. small business owners/managers of companies with $250,000 or more in revenues and fewer than 100 employees. The anonymous survey was conducted via the Internet by Ebiquity December 9-18, 2015. The poll has a margin of error of +/- 3.1% at the 95% level of confidence.

About American Express OPEN  

American Express OPEN is a leading payment card issuer for small businesses in the United States and supports business owners and entrepreneurs with products and services to help them run and grow their businesses. This includes business charge and credit cards that deliver purchasing power, flexibility, rewards, savings on business services from an expanded lineup of partners and online tools and services designed to help improve profitability.