Why a Local Economy's Strength Is Critical to Small-Business Success (Infographic)
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Even if fiscal cliff fears play out and the national economy cools down, strong local economies may provide an extra layer of insulation for many small businesses.
A new Bank of America survey published today underscores just how important the local community is to small businesses. The Bank of America Fall 2012 Strong Local Economies May Shield Small Businesses From Possible National Downturn shows that the majority of small business's customers come from the community in which their business is based. The survey of 1,003 small business owners in the U.S. was conducted by Braun Research in September and October.
Sixty-three percent of respondents said most of their customers come from their local community, while 27 percent said the majority of customers come from outside their local community, but within the U.S. Just 3 percent said that most customers are from outside the U.S.
When asked about the role that the local, national and global economy plays in their business, 75 percent of respondents said the local economy plays a significant role in their business, while 59 percent said the national economy plays a significant role.
The dependence on local business is one reason small businesses continue to be optimistic about their future prospects, despite continued uncertainty about the national economy and the looming fiscal cliff.
Thirty-eight percent of small-business owners believe their local economy will improve over the next year. What's more, the majority of small-business owners are planning to sustaining or growing their business over the next year, and 31 percent plan on hiring more employees, while 56 percent anticipate their staffing needs will remain consistent. These results are similar to what Bank of America found when it conducted the survey for the first time in May.
When it comes to entrepreneurs, confidence and optimism are "part of their DNA," says Robb Hilson, small business executive at Bank of America.
According to the survey, the top concerns of small business owners over the next year are the effectiveness of government leaders, commodities prices, healthcare costs, recovery of consumer spending and the strength of the U.S. dollar.
None of these issues, however, are enough to shake their confidence in their business prospects. "At the end of the day, there's this overriding theme that they are going to manage through, no matter what," Hilson says.
Below is an infographic of the study's findings.