Citibank Survey: SMB Owners Optimistic About Business Conditions

Half of all U.S. small business owners say business conditions are good or excellent, the most since at least 2010, according to the findings released today from Citibank® Small Business Pulse. The results mark a steady rise in outlook, up from 48 percent reporting the same in Spring 2013, 43 percent in Spring 2012, 32 percent in Spring 2011, and 24 percent in August of 2010, when the survey was first fielded. Similarly, 44 percent expect to grow their business in the next 12 months, up from 37 percent two years ago.

"The improved outlook among small business owners matches what we have seen on the ground," said Robert Kleiber, head of Citibank Small Business. "As small business owners have increasingly looked to invest in and grow their operations, Citi has stepped up to help. We lent small businesses $9.2 billion in 2013, up from $4.5 billion in 2009 and $6.0 billion in 2010. Still, owners are facing real challenges, with many citing an unprepared workforce as a major obstacle to hiring."

Low job skills an obstacle to hiring with trade schools seen as a solution
Despite the positive outlook on current business conditions and higher growth expectations, 75 percent of small business owners do not plan to hire in the next 12 months – similar to last year – and only 17 percent plan to hire full-time employees. When asked to describe the current hiring environment for their business, 37 percent said applicants are not qualified and 31 percent said applicants' skills do not match the open positions. And while half of small business owners say on-the-job training is the best preparation, many see an educational opportunity to improve workforce preparation: 59 percent say trade schools and apprenticeships should receive greater emphasis in schools.

Online sales spark growth
One year ago, 22 percent of small business owners said they intended to grow by increasing their use of online sales (Citibank Small Business Pulse, May 2013). Today, 42 percent report having some online sales and 18 percent earn more than a quarter of their total sales online. More than half (52 percent) say they plan to make use of new technologies or applications for smart phones or tablets in the next 12 months to market or expand their businesses.

Owners are using the internet in numerous ways, including customer communication (70 percent), marketing and sales (57 percent) and professional networking (55 percent). When asked how the internet and social media has benefited their businesses, owners cited improved sales and lead generation (60 percent), market insight (48 percent), increased visits to their location (47 percent), greater customer loyalty (43 percent) and reduced marketing expenditures (36 percent). Even with increased use and greater realization of benefits, most small business owners (51 percent) do not rigorously monitor or manage their businesses social media activity with 28 percent not monitoring it at all.

Small business owners play outsized role in their communities
Small business owners play a major role within their communities, according to the Citibank Small Business Pulse. Many contribute to local organizations (69 percent), support local youth sports and extracurricular activities (61 percent) and belong to local service organizations (41 percent).

Winter took its toll this year
Over the past year, more than half (51 percent) of small business experienced some impact due to inclement weather. Nearly a third (29 percent) said the weather caused customers to stay home, 23 percent had to close the business at some point (average closure: six days), 20 percent saw a decrease in workforce productivity and attendance, and 17 percent say they lost sales that they will not be able to make up. Still, just eight percent say they plan to adjust their operations next year because of the weather, with another 11 percent saying they will wait and see. Of those that will adjust, 42 percent will adjust inventory and expenses, 32 percent will establish emergency closing procedures for customers and employees, and 30 percent will increase advertising and customer communication. Seven percent of owners said the bad weather improved their business.

A challenging but rewarding career
Despite the challenges of starting and operating a small business, owners are glad they did it. When asked if they would decide to do it again, 77 percent said they would, and the same percentage said they would recommend owning a small business to their children. They say the top benefits of owning a small business are being your own boss (79 percent), independence (77 percent), having the ability to make strategic decisions (77 percent) and relationships with customers (73 percent). If they could change one thing, 42 percent said they would have started the business earlier in their career and 12 percent said they would change nothing.

In March, Citi announced that it lent $9.2 billion to U.S. small businesses in 2013, raising its three-year tally to $26.7 billion and surpassing the $24 billion commitment made in 2011 in conjunction with the U.S. Small Business Administration (SBA) to provide access to lending and capital that would speed economic recovery. Citi's lending to small businesses in 2013 was up more than 100 percent from 2009 when Citi loaned $4.5 billion. Citi pledged lending of $7 billion in 2011, $8 billion in 2012 and $9 billion in 2013. Citi surpassed its goals every year, lending small businesses $7.9 billion in 2011, $9.6 billion in 2012 and $9.2 billion in 2013.
This ad will auto-close in 10 seconds