Although a Majority Remain Optimistic About Business Conditions, Only 36 Percent of Business Owners Believe Their Taxes Will Decrease in 2018
MCLEAN, Va., April 5, 2018 /PRNewswire/ -- Small business owners remain optimistic about current and future business conditions despite having uncertainty around the impact of the Tax Cuts and Job Act that was signed into law in late 2017. Capital One's (COF) latest Small Business Growth Index, a biannual survey of 500 small business owners (SBOs), found that 52 percent of businesses expect to pay the same or more in taxes and only 36 percent believe their taxes will decrease in 2018.
"Small business confidence continues to rise with more than half of small business owners expecting a profitable 2018," shared Celia Edwards Karam, head of small business banking at Capital One. "As such, we're seeing many small business leaders and entrepreneurs focus on industry challenges such as taxes, technology and diversity."
Following are key themes uncovered by the Spring 2018 Small Business Growth Index:
SBOs supporting the tax plan expect to reinvest the savings into their business.
- Of the 36 percent of SBOs who believe they will pay less in taxes, many plan to reinvest the funds to grow their business. The top three areas where businesses expect to invest the funds include:
- While only 36 percent of SBOs believe they'll pay less in taxes in 2018, 46 percent say they support the tax plan. Among the 46 percent of small businesses owners that support the new tax law:
Optimism among SBOs remains high, with significant increases among male SBOs; however, hiring remains flat.
- The majority (62 percent) feel current business conditions are "good" or "excellent" and 51 percent feel their financial position will improve six months from now.
- Optimism among male SBOs has considerably increased, as 62 percent believe business conditions are "good" or "excellent," up from 46 percent a year ago. In comparison, 63 percent of female SBOs feel business conditions are "good" or "excellent," up from 56 percent in 2017.
- Twenty-nine percent plan on hiring additional employees in the next six months, up from 25 percent responding to the same question in the fall of 2017.
- Of the 65 percent of businesses that do not plan on hiring in the next six months:
Nearly half of small businesses believe a diverse workforce will lead to future profitability.
- Forty-seven percent of SBOs with at least one employee believe a diverse workforce is, or will be, important for their company's profitability and growth.
- A majority (56 percent) of SBOs with 20 or more employees believe a diverse workforce will drive future profitability, compared to 47 percent of businesses with fewer than 20 employees.
- Of the business owners who believe a diverse workforce is important for future profitability, 65 percent also believe their financial position will improve six months from now, compared to 49 percent of SBOs who do not believe diversity will help their business.
Forty percent of SBOs are concerned about technology replacing jobs, yet those investing in technology are more likely to hire.
- While 39 percent of SBOs are concerned that technology will eventually replace certain jobs or prevent businesses from hiring, 65 percent believe technology innovations are making it easier to streamline business operations.
- Millennial SBOs are most likely to state technology investments have made managing their businesses easier (81 percent), compared to 61 percent of Baby Boomers and 60 percent of mature business owners.
- Thirty-three percent of SBOs who state technology advancements have made it easier to manage their business have plans to hire in the next six months, compared to just 17 percent of SBOs who have not invested in technology.
"When it comes to running a business, small business owners face many of the same challenges as leaders in larger organizations – from building a diverse workforce to navigating the tax landscape – yet they tackle these challenges with fewer resources," said Buck Stinson, head of small business card at Capital One. "We are encouraged to see that business owners remain optimistic about their financial futures and we are committed to providing innovative products to fuel continued business growth."
Capital One's Spring 2018 Small Business Growth Index Survey was conducted by the market research and business intelligence firm ORC International. For this telephone study, ORC interviewed a national sample of 500 for-profit small businesses in the U.S. Small businesses are defined as those with a total annual revenue less than $10 million. Interviews were conducted from February 1-14, 2018. One respondent per business was interviewed. The margin of error is +/- 4.38 percentage points at a 95% confidence level.
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