Small business owners say an improving economy and rapid innovation make now the “best time ever” to own a business
Intangible benefits of owning a business outweigh money
NORTHBROOK, Ill., February 23, 2016 – In a first-of-its-kind study of America’s small business sector released today, the Allstate/USA TODAY Small Business Barometer revealed a strong climate for small businesses in the country overall. The study also showed a groundswell of optimism among local entrepreneurs, with a majority (53 percent) saying rapid innovation and an improving economy make now the best time ever to own a small business.
The first Allstate/USA TODAY Small Business Barometer combined a survey of more than 2,600 small business owners with a comprehensive catalog of public data to measure the strength of America’s small business climate, both nationally and in 25 major metropolitan areas.
“As owners in a national network of small businesses, we wanted deeper insight into the challenges and opportunities facing local businesses across the country,” said Allstate Agency Owner Sharon McCarty Armstrong. “It’s encouraging to see small business owners report a deep and growing optimism about their prospects, particularly for women- and minority-owned businesses. Local entrepreneurs are making sacrifices, overcoming hurdles, investing in their businesses and embracing leadership roles in their communities to pursue their dreams and help Main Streets thrive across America.”
The Allstate/USA TODAY Small Business Barometer produced an overall score of 61 for the country’s small business sector, which rates as “strong” on the Barometer’s 0-100 scale. That ranking was reflected in the majority of cities across the country. Scores in 25 major markets ranged from 57 in New York to 64 in Indianapolis and Orlando.
The Barometer analyzed an extensive inventory of public data, including statistics from the U.S. Census Bureau, the Bureau of Labor Statistics, the Federal Reserve and the Federal Register. The questions posed to small business owners in the survey evaluated their outlook in eight different categories: capital5, commodities6, customers3, innovation, labor4, regulation, technology and optimism.
The Barometer’s proprietary data model weighted the scores of each of the eight indicators to determine a final ranking based on the following ranges: excellent (81-100), strong (61-80), solid (41-60), fair (21-40) and challenged (0-20).
With a national score of 79, optimism received the highest total of any of the eight indicators. In particular, the Barometer revealed optimism to be extremely high among black business owners (100), Hispanic business owners (87), other minority business owners (92) and women business owners (85).
For a more in-depth breakdown of the national profile and for city scores, visit www.allstate.com/Barometer.
Small business owners are optimistic and confident: More than half say there has never been a better time to own a small business.
- Nearly nine in 10 respondents (89 percent) believe the benefits of owning a small business outweigh the challenges.
- The Small Business Barometer shows optimism to be especially high among women (85) and minorities (92).
Small business owners are innovators: They often try new things – adapting to change, while working more and paying themselves less.
- More than half (52 percent) of small business owners have tried a new business practice in the past three months.
- The Allstate/USA TODAY Small Business Barometer ranks innovation strong (73) among small business owners across the country.
- Nearly four in 10 (38 percent) have tried new technologies, but report that financial barriers – higher costs, taxes and regulations – get in the way of technology investments.
Small business owners report positive performance: Nearly 80 percent report that in the past year, their business has grown the same or more than in the previous year – an indication the U.S. economy continues to improve.
- More than six in 10 of those surveyed (61 percent) say their business is doing “well” or “very well” these days.
- Nearly a third (31 percent) of small business owners in the Barometer survey plan to hire workers within the next three months — a potential boon to local economies.
Local entrepreneurs value intangible benefits more than money.
- Small business owners say there are a lot of things they value, including “being my own boss,” “having a sense of freedom, “following my passion” and “creating something on my own.”
- While nearly half of small business owners claim that being their own boss gives them tremendous enjoyment (49 percent), just one in five point to money as one of their key motivators. More than one-third cite flexible work hours (35 percent) and nearly a quarter get satisfaction from creating something all their own (22 percent) or following their passion (22 percent).
- Intangible sacrifices, however, are often necessary to make a small business work. Forty percent say they have frequently missed out on opportunities to spend time with family or friends as a result of their business commitments.
Small business owners still face unique and significant challenges.
- More than half (54 percent) of small business owners rank getting new clients as five, six or seven on a scale of one (not challenging at all) to seven (very challenging) in terms of difficulty, and 36 percent say it is one of their two biggest problems – the highest response for all challenges.
- Four in 10 (41 percent) have forgone salary to benefit their business, and because prices for materials and equipment are going up. Nearly one-quarter (23 percent) of respondents report their businesses raised prices in the last year, while only 5 percent say they lowered prices in that time frame.
- Forty percent of small business owners describe the regulatory climate as “burdensome,” and 20 percent say it is “extremely burdensome.”
 As part of the Allstate/USA TODAY Small Business Barometer, Allstate hired Greenberg, Quinlan Rosner Research to field an online survey with 2,640 completed interviews: a base sample of 500 small business owners and geographic oversamples of 25 major markets ranging from N=50 to N=100 in each one to reveal issues and information relevant to small business owners and select subgroups.
2 Data related to labor, capital, commodities and customers reflect a combination of the public and survey data sources, while values related to innovation, regulation, optimism and technical challenges reflect data exclusively obtained from the Allstate Survey of Small Businesses.
3 Our measure of capital is derived from responses to seven questions in the survey, combined with national level data on the Federal Reserve discount rate, Fed funds rate and the 11th District cost of funds index. Read more: http://www.bankrate.com/rates/interest-rates/prime-rate.aspx#ixzz3tM9Y9Emx.
4 The measure of commodities is derived from responses to four questions in the survey, combined with the International Monetary Fund commodity index for a single quarter compared to the same quarter one year previous. Read more: http://www.imf.org/external/np/res/commod/index.aspx.
5 The measure of customers relies on survey responses from 10 questions, combined with data from the U.S. Bureau of Economic Analysis on disposable personal income. Read more: http://www.bea.gov/iTable/iTable.cfm?reqid=9&step=1&acrdn=2#reqid=9&step=3&isuri=1&903=58.
6 The measure of labor is derived from survey responses to seven questions in the survey, combined with national level U.S. Bureau of Labor Statistics data on average hourly earnings, wage comparison and the unemployment rate. Read more: http://www.bls.gov/data/ and http://www.bls.gov/web/empsit/tab5.txt.