While economic uncertainty persists, there are signs that many entrepreneurs feel more confident and less stressed. According to the latest findings of the American Express OPEN® Small Business Monitor, just 20 percent believe economic conditions are the biggest barrier to growth (compared to 23% in the fall of 2011), fewer have cash flow concerns (53%, versus 58% in the spring) and fewer are stressed out by the economy (59%, versus 64% in the spring).
For the small business owner, the top priority, is maintaining their current business and sources of revenue (32%) and as a result they have adopted a “wait and see” approach for growth plans. This means that only 29% of businesses surveyed have plans to hire new employees, down from 35% in the spring. However, only 16% of entrepreneurs say the economy has caused them to lay off employees versus 21% six months ago.
But will the average performing small business be prepared to roar out of the great recession?
In sharp contrast, a small cadre of “High Achievers” is taking action and focusing on growth, among this group two-thirds (66%) plan to hire over the next six months. Key considerations will are hiring for fit rather than hiring to fill.
According to Susan Sobbott, president, American Express OPEN. “In many ways, our research on small business sentiment mirrors economic indicators on the consumer front—confidence and optimism gauges are showing positive signs. To help small business owners navigate this uncertain time, we decided to zero-in on the small businesses that weathered the great recession and came out firing on all cylinders—we want to know ‘what can be learned from the high achievers that will help create of more of them?’”
New Index Uncovers Key Areas of Business Differentiation
For the first time, the semi-annual survey, now in its eleventh year, includes a Success Index to identify commonalities across successful businesses that can provide lessons for any small business. The index profiles four groups of entrepreneurs: High achievers, strivers, sustainers and strugglers.
High achievers represent six percent of the total survey sample, and on average, have spent twenty-six years in business, employ eighteen people in their firms and have attained business growth of thirty-four percent over the last three years (versus 10% growth for the total survey population).
A comparison between the high achievers and the total survey group uncovers a host of key differentiators.
They take more risks: More than two-thirds have increased their appetite for risk compared to one year ago (67%, versus 35% of the total population)
They don’t just plan for growth, they make it a priority: A majority of high achievers say they are planning to grow their businesses over the next six months (93%, versus 69% of the total survey group) and more than half (51%) have growth as their top priority (versus 31% of the total survey group)
They invest in their business: More than three-quarters (78%) are planning to make capital investments (versus 49% of the total survey group)
They provide incentives to customers to get repeat business:
- Eighty-four percent are placing heightened focus on better servicing customers to set their business apart from competitors (versus 78% overall)
- Forty percent offer loyalty rewards (versus 22% overall)
- Forty-one percent offer differentiated products or services (versus 23% overall)
They leverage social media: Seven-in-ten use social media (70% versus 49% overall). More than three quarters (79%) use social media to attract new customers (versus 57% overall).
The Success Index was developed based on self-reported responses to questions regarding business growth and characteristics correlated with high-performing entrepreneurs. Based on a 100-point scale, four distinct levels emerged: “Strugglers” (scoring between 0-40 points), “Sustainers” (scoring between 41-60 points), “Strivers” (scoring between 61-80 points) and “High achievers”, who scored highest on the Index (between 81-100 points).
American Express OPEN Small Business Monitor, released each spring and fall, is based on a nationally representative sample of 839 small business owners/managers of companies with fewer than 100 employees. The anonymous survey was conducted via telephone by Echo Research August 23-September 21, 2012. The poll has a margin of error of +/- 3.4%.
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