Small business owners are feeling better about their prospects according to new research from American Express OPEN, the card issuer’s small business community and resource site.
First, the small business financing drought and cash-crunch caused by the Great Recession has eased. An overwhelming majority of small business owners (93 percent) said they were confident they could access the capital required to grow their businesses. On behalf of American Express, Ebiquity surveyed 1,000 U.S. small business owners and managers whose companies employ fewer than 100 workers and generate $250,000 or more in sales.
Seeking growth opportunities themselves, banks are increasingly looking beyond big and established businesses. “Financial institutions are focused on small business owners,” Alice Bredin, small business advisor to American Express OPEN, told Small Business Computing.
From establishing credit to helping secure loans, financial firms are more eager to sit down with small businesses owners and help find the funds to fuel their growth. For example, small businesses racked up nearly $190 billion in purchases using the American Express Open business cards last year, the company reported.
And once they secure their financial footing, entrepreneurs often find that it has a beneficial effect on the rest of their efforts.
“There’s a strong thread of optimism weaving it way through everything, from what business owners told us,” Bredin said. “When they’re optimistic in general, they’re optimistic on everything,” and it motivates them to pursue strategies that promote growth.
It’s more than a just feel-good attitude, Bredin said. “Optimism fuels their outcomes,” often manifesting as healthy profits. But to get there, they need a plan.
Planning for Small Business Success
Nearly two-thirds of survey takers said they created a formal growth plan. Spending her days steeped in statistics and factoids, Bredin said she’s “not normally surprised by business numbers.” However, the two-thirds finding is the exception. “This number surprised me in a good way,” she admitted.
After the Great Recession, small business owners found themselves constantly putting out fires and struggling just to keep the lights on. “They didn’t have the mental bandwidth” to consider a brighter future, let alone plan for it, said Bredin.
That most entrepreneurs are drawing up formal business plans is not only indicative of an improved economic landscape, it shows that they are serious about holding their businesses to a higher standard over the long-term. “Let’s face it, if you want to get somewhere you need a plan to get there,” Bredin said.
Courting Small Business Customers, Eyeing Profits
Another encouraging statistic is that 26 percent of respondents identified increasing customer counts as the most important driver of business growth. “The path to success is paved with customers,” Bredin said. “Success for businesses at this juncture is really about finding new customers.”
But don’t neglect your existing customers, warned Bredin. There’s little point in welcoming new clients and buyers through the front door if current customers are scrambling out the back window to escape a noticeable decline in levels of service or quality.
A number of small business owners are also keeping a closer eye on profitability. “Twenty-three percent—almost a quarter—are focused on increasing profits,” Bredin said.
While that percentage may seem small, Bredin said it’s yet another sign that economic pressures have let up.
Revenues and cash flow trump eking out a profit when times are lean. “Everyone focuses on the bottom line in tough times,” she said. That nearly a quarter of small businesses now devote their energies to growing their profits suggests that they are well and truly out of the woods.
Pedro Hernandez is a contributing editor at Small Business Computing. Follow him on Twitter @ecoINSITE.
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