Small business owners are generally bullish about their prospects, according to this year’s Sage Business Index.
The report from small and midsized business (SMBs) accounting software specialist reveals that U.S. small business confidence reached 67.53 points on a 1 – 100 ratings scale, up 2.88 points from last year. Sage polled 14,000 small business decision makers across 18 countries to compile data for the annual report.
Small business confidence is at an “all-time new high,” Gabie Boko, executive vice president of marketing for Sage North America, told Small Business Computing during a phone interview. Better yet, small business owners expect those good vibes to translate into higher sales.
In the U.S., SMBs are “predicting that revenue is going to rise by 3.1 percent next year,” said Boko, above the global average of 2.5 percent. While a 3.1 percent increase may not seem like much, it’s “pretty, pretty huge,” she assured.
That modest 3.1 percent increase may translate into more jobs, and a lot of them. Forty-four percent of U.S.-based respondents indicated that they planned on hiring, on average, “2.5 people in the next 12 months.”
According to the U.S. Small Business Administration (SBA), there are 23 million small businesses in the country. At that scale, even seemingly inconsequential shifts can have a major effect on the labor market. In fact, according to Sage’s research, “the strongest hiring is going to be in the Southwest,” revealed Boko.
Small Business Risk-takers
Another byproduct of improved confidence is a willingness to jump on new opportunities to help grow a business, and of course, invest accordingly.
A slim majority (54 percent) of U.S. respondents identify as risk-takers. Just 25 percent said they were risk-averse, while 21 percent were neutral on the topic.
Boko said that “as far as small business goes, the fact that people want to take risks is good.” It’s indicative of a marketplace that is rewarding entrepreneurs, and SMBs are getting the message. “We want to be comfortable with the risk” before taking the plunge, she said.
“Risk-taking can propel a business forward and give you a competitive advantage by unearthing new markets, new capabilities and new processes,” wrote Boko in a blog post. “Good risks require careful planning and a calculated understanding of what you can afford to lose. Start by taking small risks that will build your confidence to take larger risks in the future.”
Planning for Small Business Success
Thirty-five percent of those surveyed plan to reduce operating costs to spur growth over the next 12 months. Thirty-four percent plan to improve customer loyalty, while 32 percent expect to invest in new marketing channels and tactics.
Sage’s findings also suggest that going global, or even branching out a little, could prove lucrative in the current business landscape.
Thirty-three percent of respondents reported that they conduct business with other countries. On average, exports to those regions contribute 17 percent of their sales. “Forty-five percent have seen their exports increase” last year, said Boko.
Before venturing out, “get a mentor to grow abroad,” advised Boko. The landscape is littered with failed attempts by companies that expanded into new regions without taking the sometimes-subtle differences in local markets into consideration.
Boko also suggests rallying around a company’s customers. “Never forget that the customer is number one,” she said. It is also a great way to involve and empower employees, she added.
Finally, Boko suggested letting local elected officials know that you mean business. “Get involved in politics,” she said. Pay attention to government rule-making and their effect on the marketplace. “If you want to drive change, jump in.”
Pedro Hernandez is a contributing editor at Small Business Computing. Follow him on Twitter @ecoINSITE.
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