Millennial small business owners are feeling the most positive about running and growing their business in today’s economy, according to Capital One’s second quarter Spark Business Barometer, a quarterly survey measuring the economic perceptions and financial conditions of small business owners, and gauging sentiment on top issues and trends impacting small businesses today.
“Small businesses have a tremendous impact on our local and national economies, with two out of three new jobs being created by small businesses, and the countless product and service innovations they bring to the marketplace”
The nationwide survey revealed that overall small business sentiment is up – with 39 percent of all small business owners reporting a better financial position today compared to one year ago. That positive perspective was particularly true for millennials (18-33-year-olds) who were the most optimistic group surveyed when asked about their sales volume, economic outlook and plans for growth. In fact, nearly two-thirds (62 percent) of millennial small business owners reported increased sales in the past six months, compared to 41 percent of small businesses overall and 45 percent of millennial small business owners plan to hire in the next six months (versus 30 percent of all small business owners). The survey also found that more millennials support legislation, like minimum wage increases, that could improve their workforce’s financial position.
“Millennials, like every generation, have their own unique experience and perspective, and this quarter’s Barometer shows many millennial small business owners are feeling confident and ready to take advantage of improvements and growth in the broader economic environment,” said Buck Stinson, head of small business credit card at Capital One. “Regardless of where you are in your journey as a business owner, there are many innovative tools and resources designed to simplify and enhance core business processes, giving business owners more time to focus on managing and growing their business. At Capital One, we’re very excited to serve small businesses of all types, and help them go after and achieve their goals.”
Minimum Wage Legislation
This quarter’s Barometer also explored small business sentiment related to minimum wage legislation, and found that business owners are split on the issue – with 36 percent in favor of increased wages, and an equal percentage opposed to such increases. A significantly higher number of millennial small business owners (47 percent) support the proposals. The survey also revealed:
- Of the small business executives that support the proposals to increase the minimum wage in their state, 63 percent say that increases to the federal minimum wage would have no impact on their business while 10 percent indicate that it would be easier to recruit and retain new employees.
- Small business owners that oppose proposals to increase the minimum wage in their state are four times more likely to say that they would lay off employees if the federal minimum wage were increased.
- Millennials are more likely than other generations to cite positive impacts for an increased minimum wage, with 17 percent reporting that it would make it easier to recruit and retain new employees. Only 6 percent of gen X (ages 34-44), 3 percent of baby boomer (ages 45-64) and 7 percent of silent generation (65 and older) business owners agree. Millennial small business owners are also less likely than others to lay off employees or freeze hiring plans as a result of increased minimum wages.
- 32 percent of small business owners overall indicated that they would raise prices to offset the cost of increased wages.
The second quarter Spark Business Barometer’s key findings are summarized below:
- Small business sales are up. According to this quarter’s survey, 41 percent of small business owners increased sales over the last six months, while more than one third (34 percent) report that sales have remained the same. Small business sales results have been trending upwards, with more small business owners reporting sales improvement than sales stagnation in each of the previous three quarters.
- Positive future outlook is on the rise. Looking ahead, small business owners are cautiously optimistic about the future. The survey found that while 45 percent of small business owners believe their firm’s financial situation will be better in six months, another 45 percent expect their situation to remain the same. This sentiment has improved steadily over time – in Q1 2009, 34 percent of small business owners indicated that they felt their firms’ financial positions were worse than the previous year.
- Optimism at the local level is exceeding optimism at the national level. Small business owners across the country continue to be more confident in the outlook for the local economy than the national economy. Nearly half (49 percent) of those surveyed are optimistic about the direction the national economy is headed in the next 12 months, although sentiment among millennials is significantly higher (79 percent) than the national average. Three-quarters (74 percent) of millennial small business owners consider business conditions excellent or good – only half (51 percent) of total small business owners agree with this sentiment. Optimism in the national economy is down 3 percent since the first quarter.
- Current financial situations are improving. When asked to compare their current financial situation with this time last year, 39 percent of small business owners believe they are better off, which is a 5 percent improvement since the previous quarter and the highest since 2012.
- Millennial small business owners are more likely to support minimum wage increases. Small business owners overall are divided on proposed minimum wage increases. More than one-third (36 percent) are in favor of the proposed increase, while another one-third (36 percent) are opposed. Nearly half of millennial small business owners (47 percent) support the proposals.
- Small businesses owned by millennials are more likely to hire in the next six months. Forty-five percent of millennial small business owners intend to hire new employees, compared with 30 percent of small business owners overall.
“Small businesses have a tremendous impact on our local and national economies, with two out of three new jobs being created by small businesses, and the countless product and service innovations they bring to the marketplace,” said Keri Gohman, head of small business banking at Capital One. “Owning a small business isn’t always easy, but it can be incredibly rewarding, and we’re committed to understanding and helping address the unique needs and challenges today’s business owners face. Whether it’s through business intelligence and insights, digital tools and resources, improved access to capital, or industry leading rewards programs, we’re focused on enabling and empowering both aspiring and established businesses – and helping them achieve their goals.”
Given how vital small business success is to both the national and local economy, Capital One remains committed to understanding the challenges, trends and perceptions that affect overall performance and day-to-day operations. Capital One strives to understand the small business landscape, in an effort to better serve its clients and customers across the country. Follow along on Facebook at Capital One Small Business and on Twitter at @CapitalOneSpark. When sharing on social media, please use hashtag #SparkBizBarometer to follow the conversation.
The findings reported in this release are from a telephone survey conducted by the opinion research firm, APCO Insight, the global opinion research division of communications consultancy, APCO Worldwide. APCO Insight interviewed a nationally-representative random sample of 400 for-profit small businesses in the U.S., weighted to Dunn and Bradstreet counts of all businesses nationwide by SIC code, employee size, and geography. Small businesses are defined as those with less than $10 million in annual revenue. The interviews were conducted from June 24 – July 2, 2014. All interviews were conducted by telephone at their places of business. One respondent per business was contacted. The margin of error is ± 4.9 percentage points at the 95 percent confidence level. Interviews were monitored at random. Sampling for this study was conducted using a national sample of businesses drawn from InfoUSA. All interviews were conducted using a computer assisted telephone interviewing (CATI) system. Statistical weights were designed from the United States Department of Commerce to ensure proper inclusion of all SIC codes.
About Capital One
Capital One Financial Corporation (www.capitalone.com) is a financial holding company whose subsidiaries, which include Capital One, N.A., and Capital One Bank (USA), N. A., had $205.9 billion in deposits and $298.3 billion in total assets as of June 30, 2014. Headquartered in McLean, Virginia, Capital One offers a broad spectrum of financial products and services to consumers, small businesses and commercial clients through a variety of channels. Capital One, N.A. has approximately 900 branch locations primarily in New York, New Jersey, Texas, Louisiana, Maryland, Virginia and the District of Columbia. A Fortune 500 company, Capital One trades on the New York Stock Exchange under the symbol “COF” and is included in the S&P 100 index.