In February, headlines proclaimed that small business confidence had hit all-time highs on the heels of tax reform passing. A CNBC/SurveyMonkey Small Business Confidence Index released at the time saw an increase of five points, from 57 to 62 — the highest it has ever recorded.
As the Koble platform continues to enable small businesses to discover, connect and facilitate business deals with businesses of all sizes across the globe, the team at Koble wanted to take a closer look at if small-to-medium sized operators anticipate their businesses to continue thriving throughout the year. Specifically, we wanted to look at their biggest growth obstacles and sales plans for 2018.
To find out, Koble commissioned a Google Survey administered to 500 owners and managers of small-to-medium sized business across the U.S. with fewer than 100 employees. Here’s what we found with the results of Koble’s 2018 SMB Sales and Growth Confidence Survey.
Online Advertising and Networking Online Drives Proactive Sales Plans
We first asked SMB operators to note all the proactive ways they intended to create sales leads in 2018 outside of the more organic channels such as word of mouth or referrals.
Respondents noted that online advertising (49%) was the top way they planned to create sales leads in 2018. This was followed by operators that chose networking online (41%) or through a networking event or conference (35%).
When looking across the different vertical industries of the SMB’s within our sample, we found that those operating tech/software businesses were most likely to plan on driving sales through networking events or conferences, followed by online advertising and networking online.
Those running business services companies, on the other hand, were most likely to note they plan on driving new sales leads in 2018 by networking online, followed by networking events and online advertising.
Compare that with those operating retail or food businesses, who noted they planned to use online advertising the most to drive sales leads, followed by networking online and email market.
Finding Customers Outweighs All Other Growth Challenges for SMB’s
When asked to name the biggest challenge they anticipate to face in growing their business this year, SMB operators overwhelming noted that finding new customers (46%) is their top challenge. This was followed by limited access to new capital and hiring new employees, which were both anticipated to be a top challenge for 16% of operators respectively his year.
Interestingly when you break out operator responses by gender, there are some differences in anticipating limited access to capital and hiring new employees as challenges for growing their businesses this year.
Over 19% of men noted that limited access to capital would be a top challenge this year in growing their business versus 13% of women operators. Those percentages nearly swap when it comes to hiring new employees being seen a challenge in growing their company in 2018 — with 17% of women noting it will be a top challenge versus 11% of men.
In addition, while operators across all industry verticals noted finding new customers would be their top challenge, the second most likely challenge in growing their business this year did vary by company type. For instance, those operating SMB’s in the real estate or construction industry noted limited access to capital would be their second biggest challenge (25%), whereas those in the retail or food industry noted hiring new employees would be their second biggest challenge (22%).
SMB’s Aspire to Land Apple and Walmart as Customers or Partners
On the Koble platform, we often facilitate connections and ultimately business deals between
SMB’s and companies such as Sprint, Microsoft and Warner Brothers. Given that we’ve seen firsthand how much growth even one deal with a major corporation can drive for a small business, we wanted to gauge which of the top five on the Fortune 500 operators aspire to gain as a future customer or business partner.
Perhaps not surprisingly, Apple (31.9%) led the list (by a nose) over Walmart (31.5%). However, answers to this question were often tied closely to industry specialty. For example, of those operating an SMB in the retail or food industry, Walmart (48%) was the top choice. Walmart was also a top choice for those operating health and wellness companies (42%). Meanwhile for SMB operators in the real estate and construction industry, aspiring to work with a company with deep domain expertise in the industry such as Berkshire Hathaway made the most sense (51%).
SMB’s Are Less Confident in Sales Prospects Under Trump Administration
Given the current administration and its policies have been polarizing — even for SMB operators — we wanted to see if the Trump administration has created broader sales confidence among business owners and managers. Despite calls of small business confidence being at all-time highs, we found that 58% of SMB operators, who answered our political question, are less confident in their businesses sales prospects under the Trump administration in 2018.
Women SMB operators were slightly less confident (62%) than men (56%) in business revenue driving prospects under the current administration, while those operating retail or food businesses (66%) were the least confident when it came to examining responses by industry.
Those operating real estate and construction businesses were much more favorable with their view on business sales prospects under the trump administration with 64% saying they were more confident in revenue prospects.
Most SMB’s See Little Impact with Tax Reform
What’s driving the malaise for SMB’s under the Trump administration? While others have reported that tax reform was a driver of confidence for small business, the 500 SMB operators that we surveyed were less positive on tax reform’s implications for their businesses.
In fact, the majority of SMB’s (43%) said tax reform will have no impact on their business. Those operating tech/engineering SMB’s were the most likely (51%) industry vertical to say it would have no impact on their business.
That said, there were groups of small businesses that view Trump’s tax reform as a positive for their business. The majority of business service and real estate/construction operators saw tax reform positively impacting their business in 2018.
In addition, Male SMB operators (36%) were more positive on the potential impact of tax reform on their business versus women operators (26%).
SMB’s Plan to Reinvest Profits in Infrastructure and Operations
With tax season here, many SMB’s are coming to a final realization on how successful the last calendar year was for their business. Those with profits are likely currently examining where to reinvest in their business. When it comes to where SMB operators plan to reinvest sales profits in 2018, reinvesting in operations and infrastructure was the top choice (28%). Reinvesting profits in marketing and sales was close behind as a second choice (22%).
Those running tech and software engineering firms were most likely to note they would reinvest in operations and infrastructure, while those operating retail and food businesses were the most likely to reinvest in marketing and sales. Those building business service companies were equally split between reinvesting profits in these top two choices.
Coming in after the two top choices were those who noted they would not have profits to reinvest in the business this year (18%). Around 20% of those operating business service and real estate companies said they wouldn’t have profits to reinvest this year — making them to most likely to note this. They were followed by those running retail/food and tech/software businesses, with 15% of respondents within this subgroup noting they would have no profits to invest.
When breaking out by gender we found that women operators were most likely to reinvest in marketing and sales, and men were most likely to reinvest in operations or infrastructure. However, the biggest discrepancy between men and women operators was around using profits to pay employees more. While 15% of men noted they would use profits to pay employees more, only 9% of women noted they’d do the same.