Good News for Tech-Savvy Small Businesses in Capital One Study

by Brian Smith 0

For small business owners, the US economic story in 2017, so far, has been one of optimism. Amid widely-reported small business positivity across most sectors, recent job reports peg the unemployment rate at its lowest in the past 10 years.



Earlier this year, Capital One Spark Business took a survey of small business owners (SBOs) across the United States – the Small Business Growth Index – to gauge sentiment and actions in the small business environment such as investments in technology and marketing, overall optimism and benefits offerings. By and large, the results corroborate what we’re hearing from other sectors of the economy – small business optimism has returned in force.


However, the devil is in the details. While small businesses are happy to report positive sentiment, there is plenty of room for improvement and enhancement of business strategies. Here are some key takeaways:


Small business optimism is on the rise, but owners are hesitant to invest

Small business optimism is up nine points in the first half of 2017, with exactly 50 percent of SBOs saying business conditions are good or excellent. An equal number expect positive business growth in the next six months – the highest percentage reported since mid-2012. In particular, women (56 percent) and millennial (67 percent) small business owners are the most likely to state favorable conditions.


While their outlook is positive, hesitancy to invest in growth may be a sign of tempered expectations. On the hiring front, just over a quarter (27 percent) of small businesses plan on hiring in the next six months. And while optimism typically begets marketing – another form of business investment – two-thirds of business owners do not plan on increasing their marketing spend in 2017. A quarter of that category say that cash flow concerns are the chief reason behind not growing their marketing spend.


Tech poses challenges and opportunities

Many small businesses acknowledge they are behind the tech curve, but they also realize the positive impact it can have on their operation. “Keeping up with technology” was cited by nearly one-third (30 percent) of business as a top concern. This outpaced other concerns that are widely cited as affecting small businesses such as accessing capital and navigating a potential minimum wage increase.


SBOs pointed to the Internet of Things, EMV/chip, and mobile/digital payments as the technologies that stand to most impact their businesses in 2017. SBOs can stay ahead of these tech trends by engaging with partners, such as technology providers, bankers and accountants to stay abreast of best practices in their industry. The good news is that many of these new technologies will positively impact the customer experience, aiding in retention.


Small businesses unlocking improved sales via mobile payments

It’s no secret that small businesses face challenges implementing mobile payments for customers. Up-front costs, implementation and upkeep challenges and perceived lack of necessity are all barriers to entry. Perhaps for these reasons, Capital One’s SBGI found that only 23 percent of small businesses currently accept mobile payments.


Millennial SBOs pace slightly ahead of their older counterparts in familiarity with newer technologies, including adoption of mobile payments. With just 28 percent of millennials accepting mobile payments, there’s plenty of room to grow. A similar story can be told of retailers, 29 percent of whom utilize mobile payments.


SBOs should be mindful of the positive impact some of these investments could have on their business. Nearly half (46 percent) of businesses utilizing mobile payments reported increased sales over the past six months, compared to just 35 percent of SBOs who don’t offer this option.


So what’s the takeaway?

Consider investments: Amid a generally optimistic landscape, the timing may be right to invest in improvements that will benefit their business in the long run. Whether its adding to your workforce or investing in tech for efficiency, look at your financing options (and while you’re at it, focus on improving your business credit score).


Embrace your tech potential: Per the study’s findings, tech-savvy SBOs tend to have stronger business performance. Mobile payments in particular can help small businesses streamline the purchasing process, eliminate invoicing delays, boost cash flow, and stay ahead of competition of all shapes and sizes (especially retail businesses, where this technology is more commonplace).


Be advised: While SBOs cite worries about managing cash flow and staying ahead of the technology curve, taxes and regulatory concerns outpace these fears. Very few small business owners have the time to stay on top of legislative developments, but they can have a big impact. Local and state business organizations can be helpful when it comes to tracking regulatory legislation that could affect your small business. Consider finding a trusted advisor from an organization such asBusinessAdvising.Org or set up a check-in with your accountant or tax advisor as well.


For informational purposes only. Please consult your business financial advisor when making investment decisions.

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