New York Forty-three percent of small-business owners consider business conditions to be positive, according to the latest Citibank small business survey released today. This is a significant increase since August 2010, when 24 percent of small-business owners surveyed reported overall positive business conditions.
One-third (33 percent) of respondents said their own business is better than it was a year ago – up from 26 percent in January. Another 33 percent expect their business will grow by more than 10 percent this year.
"Small-business owners risk everything to pursue their dreams and are willing to do what it takes to make it," said Maria Veltre, Managing Director, Citi Small Business. "Their personal sacrifices, passion and ability to adapt have positioned them to capitalize on improving business conditions."
Necessity: The Mother of Reinvention
A majority of respondents (53 percent) say they have reinvented their business "to stay afloat or competitive." This strategy is reinforced in the current competitive climate that 38 percent of respondents describe as "extremely intense."
"Small-business owners are especially adept at reinvention – whether because of obstacles or new visions for growth," Veltre said. "Change is never easy, but neither is starting and running a business. We see our small-business clients embracing change and reinventing themselves to secure a rewarding future."
As part of the reinvention process, small-business owners say they focused on overhauling the products or services they offered (47 percent). This was followed by adjusting their infrastructure, such as technology or staffing (24 percent) and beefing up their sales and marketing (18 percent). A small amount (7 percent) said they reduced pricing and took less profit. Only 3 percent relocated.
If small-business owners aren't reinventing their business, they stay sharp and evolve to keep up with the competition. The following steps were cited as ways they kept business thriving:
Regarding the steps they plan to take during the remainder of 2012:
"Small-business owners should consider these steps as a check list for growth and survival," said Veltre. "Never one to sit idle, a small-business owner continually invests in change in order to stay relevant."
Part of that reinvention comes from spending, as proven by 38 percent of respondents who increased the amount they spent on capital investments like computer, inventory and facilities over the past 12 months. Their top two sources of funding have been revenue and profits (75 percent) and personal savings (62 percent).
Personal Sacrifice Earns Appreciation from Employees and Community
The past few years have taken a personal toll on small business owners: 63 percent say the major challenge they face owning or running a business was personal stress and being accountable for everyone and everything, second only to the general state of the economy (66 percent).
Despite overall optimism, small business owners report making significant sacrifices to keep their businesses going and growing over the past few years. Not only did 78 percent take less profit to support the business at some point in the past, 66 percent did so to pay employees rather than reduce staff. A significant majority (70 percent) also say they worked more hours than usual, often sacrificing family time and missing vacations.
In addition to using their own money to help their business survive (69 percent), the majority of small-business owners (54 percent) say they have gone without a paycheck. Looking back over the history of their businesses, almost one-quarter (23 percent) have gone without pay for one year or more.
Specifically, 80 percent of small-business owners believe their employees appreciate the sacrifices they made to keep their businesses operating. Demonstrating true commitment, employees showed thanks by their own investment in the success of the company:
To show their own appreciation of employees, small-business owners offer additional time off (78 percent), a bonus (74 percent) or a raise (70 percent).
Customers, too, appreciate the stress and sacrifice of running a company. Almost seven in 10 (69 percent) survey respondents say their customers recognize and appreciate their sacrifices. Even more (87 percent) say they have been thanked by customers.
"The level of appreciation shown to small-business owners by employees and customers is uplifting," said Veltre. "We encourage everyone to thank their favorite small business owner. Small business is a highly personal undertaking; to the small business owner a simple, personal gesture of appreciation goes a long way."
About the Survey
This Citibank survey was conducted via telephone May 1, 2012 – May 18, 2012 by Abt SRBI Research and Public Affairs among a national random sample of 750 small business owners/operators, aged 18 and older, throughout the United States. Oversample interviews were conducted in New York (200 interviews) and California (200 interviews) markets. The margin of error for the national sample is approximately +/- 3.58 percent and +/- 6.93 percent for New York and California over samples. Surveys are subject to other error sources as well, including sampling coverage error, recording error and respondent error.
Citi, the leading global bank, has approximately 200 million customer accounts and does business in more than 160 countries and jurisdictions. Citi provides consumers, corporations, governments and institutions with a broad range of financial products and services, including consumer banking and credit, corporate and investment banking, securities brokerage, transaction services, and wealth management.
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