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The latest Capital One Spark Business Barometer Survey showed small business owners feeling less optimistic about the economy in general, and their businesses’ growth in particular, than they were earlier in 2015.
Exactly half (50%) of small business owners rated economic conditions in their area as fair or poor. Only 31% of small business owners said their finances had improved over the last year. In March 2015, 35% said finances were looking up. And whereas in March, 47% of small biz owners expected finances to improve over the next six months, that number fell to 38% in the latest survey.
In spite of flagging economic optimism, survey respondents still planned to increase their investments in a few areas: 34% said they’d spend money on solutions to improve efficiency, 20% said they’d expand their workforces, and 18% said they would shell out for new technology to develop client relations.
Women and Millennials take a brighter view
Two groups—women and Millennials—have room for optimism. Both demographics report increased sales over the last six months, and Millennials, of whom 57% saw a jump in sales during that time, lead every other demographic in sales by over 15 percentage points.
Women business owners are more optimistic than men about conditions with 56% of them saying that things are excellent or good versus 44% of men.
Millennials as a whole are more optimistic than men or women, with 71% of 18-34-year-olds calling local business conditions excellent or good. Forty-nine percent of Millennials rate their financial position as improved over last year, compared with 36% of Gen X-ers, 28% of Baby Boomers, and 23% of people ages 70 and older.
Challenges for the coming year
When asked where they struggle and what impedes growth, small business owners pointed to efficiency and expenses. Thirty-four percent find operating efficiently to be challenging, and 32% struggle with managing expenses for their businesses. Twenty-five percent find managing cash flow difficult, and 16% grapple with finding the right software, tech, and management tools.
One of those tech tools is adaptation of mobile and digital technology. While expanding mobile operations can increase productivity and sales, only 14% currently manage business finances via mobile. Twelve percent plan to up their investments in the e-commerce and digital spaces, and 6% will take advantage of digital payment systems like Apple Pay.
"Business owners appear to be slightly more cautious given recent market turbulence, pending regulations, and the upcoming election cycle,” said Capital One’s Buck Stinson. "At the same time, it's encouraging to see business owners taking the steps needed to remain competitive – prioritizing and investing in solutions that drive efficiency and enable growth."
The survey was conducted by phone and surveyed a national sample of 400 for-profit businesses with annual revenues of less than $10 million in July and August 2015.