CAUTIOUS OPTIMISM
☆ 16th Annual Survey
☆ Nationally representative
☆ 1,058 completed surveys
☆ Business owners, executives and key decision makers
☆ Businesses with 5-499 employees
☆ Phone recruit - online survey
☆ January 2018
Note: U.S. Census Bureau data and other external research are also used in parts of this report.
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THE BUSINESSJOURNALSA DIVISION OF ACBJ
1 SMB Market Size and Outlook
2 SMB Owners and Their Concerns
3 Technology Usage and Attitudes
4 Media Usage and Preference
2018 SMB Key Insight Areas
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THE BUSINESSJOURNALSA DIVISION OF ACBJ
MARKET SIZE AND GENERAL OUTLOOK
THE BUSINESSJOURNALSA DIVISION OF ACBJ
The SMB market continues to grow
5Source: Small Business Research Center, based on Census and Bureau of Labor Statistics data
3,381,125
3,422,130
3,464,503
3,540,322
3,582,517
3,627,559
2013 2014 2015 2016 2017 2018
Number of U.S. Businesses with 5-499 Employees
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THE BUSINESSJOURNALSA DIVISION OF ACBJ
Growth of SMBs has been spread across the coasts and south over the last five years
6Source: Small Business Research Center, based on Census and Bureau of Labor Statistics data: Growth in number of SMBs with 5-499 employees from 2013 to 2018
10% - 15% growth5% – 9.9% growth0.1% – 4.9% growth-0.1% - -4% growth
Washington
Oregon
Montana
California
Arizona
Wyoming
Nevada
Idaho
Utah
Colorado
NewMexico
Texas
Oklahoma
NorthDakota
SouthDakota
Nebraska
Kansas
Louisiana
Arkansas
Missouri
Iowa
Minnesota
Wisconsin
IllinoisIndiana
Michigan
Ohio
Kentucky
Tennessee
Florida
MississippiAlabama
Georgia
SouthCarolina
NorthCarolina
Virginia
WestVirginia
Pennsylvania
Maryland
NewYork
Maine
Alaska
Hawaii
Delaware
NewJersey
Vermont
NewHampshire
Massachusetts
Connecticut RhodeIsland
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THE BUSINESSJOURNALSA DIVISION OF ACBJ
SMBs continue to have a positive outlook
7“How do you think your company’s prospects will change over the next 12 months? By prospects, we mean the general success of your business.” (2008-2013) “What is your level of confidence in the success of your company (based on revenue, profitability and growth) over the next 24 months?” (2014-2018)
Positive Outlook About Future Business Prospects
77% 76%73% 73%
81% 79% 80% 80%
Dec 10 Dec 11 Dec 12 Jan 14 Jan 15 Jan 16 Jan 17 Jan 18
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THE BUSINESSJOURNALSA DIVISION OF ACBJ
SMB owners also have confidence in the future of the U.S. economy
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Confidence the U.S. Economy Will Improve Over the Next 24 Months
26% 24% 28%
19% 24%26%
8%13%
15%
2016 2017 2018
61%
53%
Extremely Confident
Very Confident
Confident
69%
“What is your level of confidence in the success of the US economy over the next 24 months?”
THE BUSINESSJOURNALSA DIVISION OF ACBJ
SMB confidence comes from seeing continued growth in both their company sales and their personal net worth
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27%30%
35% 36% 37% 40%
2013 2014 2015 2016 2017 2018
“What would you estimate your company’s average, annual percentage sales growth rate has been over the last three years, that is on a per year basis, from 2015 through 2017?” “Which of the following best describes your total net worth?”
59 %65%
71% 70% 71% 73%
2013 2014 2015 2016 2017 2018
Net Worth Over $1 MillionSales Increase
THE BUSINESSJOURNALSA DIVISION OF ACBJ
SMB OWNERS AND THEIR CONCERNS
THE BUSINESSJOURNALSA DIVISION OF ACBJ
SMB owners are highly educated and upscale
Upscale$175K average HHI
Mid-50s54 Average Age
Educated70% college grads+
Men68%
$7.9MAverage annual sales
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THE BUSINESSJOURNALSA DIVISION OF ACBJ
Concerns regarding employees and customers are top of mind for SMB owners
46%
63%
40%
41%
44%
44%
49%
64%
45%
46%
50%
51%
Rising costs of doing business
Cost of health insurance/benefits
Possible tax changes that could hurt business
Maintaining existing customer base
Being able to attract new customers
Being able to find & keep good employees
2018 2017
% Very Concerned
Business Concerns
Concern Has Increased Significantly From Last Year
Concern Has Held Steady From Last Year
12“What are the issues that you’re most concerned about? Please indicate your level of concern for each of the following areas as they relate to your business.””
THE BUSINESSJOURNALSA DIVISION OF ACBJ
Owners of smaller SMBs have a greater concern about finding and keeping good employees
“Very Concerned” About Being Able To Find And Keep Good Employees
“What are the issues that you’re most concerned about? Please indicate your level of concern for each of the following areas as they relate to your business.”
Number of Employees
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50%47%
49%53%
43%
48%44%
42%
53% 53%
36%33%
5-19 20-49 50-99 100-499
201620172018
THE BUSINESSJOURNALSA DIVISION OF ACBJ
Local sales are the core market for most SMBs
“Using 100 percentage points, how would you break down your company’s sales among the following three geographic categories?”
Company Sales By Geography
28%
60%
92%
Outside the U.S.
Rest of the U.S.
Within Local Area
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THE BUSINESSJOURNALSA DIVISION OF ACBJ
Two-thirds of SMBs spent less than $50,000 on their advertising/marketing budgets annually
“How would you rate the impact of advertising locally for your business?” “What was your company’s annual advertising and marketing communications budget in 2017?”
Annual Advertising/Marketing Budget
Under $25,00050%
$25,000 to under $50,00013%
$50,000 or more23%
No advertising/marketing budget14%
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THE BUSINESSJOURNALSA DIVISION OF ACBJ
SMBs plan to use a mix of both traditional and digital advertising vehicles in the next 1-2 years
“Which of the following marketing and advertising vehicles has your company used in the past 12 months?” “Which of the followingwill your company use more of in the next 1-2 years?”
4%
4%
5%
6%
8%
9%
9%
11%
13%
14%
15%
20%
21%
21%
21%
26%
28%
35%
National advertising
Native online advertising
Outdoor advertising
Broadcast advertising
SEM (i.e., buying key words on Google)
Mobile advertising
Online display advertising/sponsorships
Videos (e.g., demonstrations, features via YouTube)
Sales promotion (e.g., price discounts, flash sales, etc.)
Public relations
SEO (i.e., optimizing your website for searches)
Print advertising
Direct mail
Trade shows & events
Local advertising
Social media marketing
Social media advertising
Email marketing
Planned Usage of Advertising/Marketing Vehicles In Next 1-2 Years
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THE BUSINESSJOURNALSA DIVISION OF ACBJ
TECHNOLOGY USAGE AND ATTITUDES
THE BUSINESSJOURNALSA DIVISION OF ACBJ
Two-thirds of SMBs have a company website
18“Which of the following products or services have you used in the past year for your business?”
Yes
67%
No
33%
Have A Company Website
THE BUSINESSJOURNALSA DIVISION OF ACBJ
Technology is a critical and growing part of business expansion
19“Thinking about your company website, how much do you agree or disagree with the following statements.” “To what extent has the national expansion of your company been facilitated by your business website or some facet of the Internet?”
Company Website Design and Usage
30%
48%
80%
Our company website ise-commerce enabled
We use data from ourcompany website to
analyze customer trendsand inform our business
decisions
Company website isdesigned for mobile, aswell as desktop/laptop,
usage
% Agree
43%
15%
National expansion has been facilitated bycompany website
National Sales Expansion Facilitated By Company Website
58%
THE BUSINESSJOURNALSA DIVISION OF ACBJ
But technology is increasingly seen as risky
“Very Concerned” About The Safety And Security Of Your Firm's Technology, Email, And Documents
28%
38%
27%
47%
31%
45%
2017 2018
Total $25M+ in Sales Generate Revenue From Social Media
“What are the issues that you’re most concerned about? Please indicate your level of concern for each of the following areas as they relate to your business.”” 20
THE BUSINESSJOURNALSA DIVISION OF ACBJ
SMBs awareness of emerging technology is speeding up
21“Which of the following emerging technologies are you aware of?”
Awareness of Emerging Technologies
2017 2018 Change
Artificial Intelligence 44% 56% +12
Virtual Reality 53 63 +10
Robotics 49 57 +8
3D Printing 65 72 +7
Biometrics 32 38 +6
Mobile Solutions 46 51 +5
Internet of Things 25 28 +3
Chatbots 12 15 +3
Cryptocurrencies NA 47 --
Blockchain NA 16 --
THE BUSINESSJOURNALSA DIVISION OF ACBJ
MEDIA USAGE AND PREFERENCE
THE BUSINESSJOURNALSA DIVISION OF ACBJ
Trust in journalism rebounds as trust in platforms declines
54%
52%
54%
51%
56%
54%
59%
53%
50%
53%
54%
54%
53%
51%
2012 2013 2014 2015 2016 2017 2018
Source: 2018 Edelman GlobalTrust Barometer“When looking for general news and information, how much would you trust each type of source?” Top-4 Box of nine-point scale“Journalism” is the professional creation of news content, and is represented by traditional media and online-only media.“Platforms” is how the content is delivered or discovered and is represented by social media and search engines.
Journalism:Traditional and online-only news sources
Platforms:Search engines and social media platforms
Trust Each Source For General News & InformationTop-4 box rating in a 9-point scale
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THE BUSINESSJOURNALSA DIVISION OF ACBJ
Local news sources are now more trusted
Source: Pew Research Center's American Trends Panel Poll, March 2017 and January 2016
“How much, if at all, do you trust the information you get from...________--a lot, some, not too much, or not at all?”
Trust The Information You Get From...
77% 77%74%
34%
85%
76% 74%
35%
Local News
Organizations
Family, Friends &
Acquaintances
National News
Organizations
Social Media Sites
2016
2017
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THE BUSINESSJOURNALSA DIVISION OF ACBJ
A variety of media channels are used by SMB owners to consume business news/information
25“When it comes to consuming business news and information, what media channels are most important to you? Please select all that apply.”
9%
22%
32%
30%
31%
51%
56%
Non-broadcast channels
Social media
Radio
Business printpublications
Daily newspapers
Television
Digital or online
Important Media Channels For Consuming Business News/Information
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THE BUSINESSJOURNALSA DIVISION OF ACBJ
SMB owners also use a variety of non-broadcast mediums, YouTube being the most popular
26“Which of the following non-broadcast mediums have you personally used in the past year?”
Non-Broadcast Mediums Used Past Year
17%
18%
23%
25%
28%
37%
45%
46%
51%
72%
Blogs
PPV
Podcasts
Company Sponsored Webinars
Downloads Into iPod, SmartPhoneor Computer
DVR/TiVo
Music Streaming
Satellite Radio/Sirius XM
Video Streaming Services
YouTube
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THE BUSINESSJOURNALSA DIVISION OF ACBJ
SMB owners read a variety of different types of print media focused on business
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71%65%
60% 59%
Business Section of LocalNewspaper
National Newspaper(e.g., WSJ, NYT)
National Business Publication(e.g., Forbes, Fortune)
Local Business Journal(e.g., Crain's, AtlantaBusiness Chronicle)
Print Readership
“Of the media and other activities that you engage in, for what reasons do you use each? Please select all the reasons that apply.”
Average # Hours Use Per Week
1.5 2.0 1.5 1.4
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THE BUSINESSJOURNALSA DIVISION OF ACBJ
8 of 10 SMB owners visit financial/banking websites and do so an average of 2 hours/week
28“In an average week, how much time do you spend with each type of media or other activities shown below?”
Use Digital/Websites/Apps
Average # Hours Use Per Week
2.2 2.1 3.0
82%
70% 68%
Financial/Banking/Investment Websites /Apps
Business Websites/Apps Social Media
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THE BUSINESSJOURNALSA DIVISION OF ACBJ
Facebook and LinkedIn are most common social networks used for business; a third of SMBs post to social media at least once a week
Social Networks Used for Business
“For each Social Network, please click whether it is used for business reasons, personal reasons or both.” “How often does your business post to social media?”
1%
2%
2%
7%
11%
13%
20%
21%
43%
50%
Periscope
Foursquare
Snapchat
Facebook Messenger
Google+
Frequency Business Posts to Social Media
Ever Post (Net) 70%
Once a week or more often 35
Several times a month 13
Once a month 7
Once every 2-3 month 6
Once every 6 month 3
Less often than once every 6 months 6
Never Post 30
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THE BUSINESSJOURNALSA DIVISION OF ACBJ
Print and Digital play important and complementary roles
Preferences For Print and Digital Media
“Thinking specifically about business news and information, please tell us about your preferences for electronic versus print media by indicating how much you agree or disagree with each of the following statements.”
79%
79%
83%
87%
92%
72%
77%
81%
Smartphone/Tablet Save Me Time
Far Easier To Access
Immediate Access to Breaking News
Skimming & Browsing
Wider Array of Sources
Can Take In More Thoroughly
Allows Far More Relaxed Reading
More For Detail, Specifics & Precision
Digital
% Agree
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THE BUSINESSJOURNALSA DIVISION OF ACBJ
Print and Digital’s complementary strengths are preferred by different audiences
“Thinking specifically about business news and information, please tell us about your preferences for electronic versus print media by indicating how much you agree or disagree with each of the following statements.”
Reasons for Preference for Print & Digital Media(Agree Completely/Mostly)
Total 100-499 Employees
$25M + in Sales
Does Business Internationally
In Business 10 Years or Less
Under 40 Years Old
Take in business info more thoroughly 43% 57% 58% 47% 44% 44%
More relaxed reading 46 41 45 53 48 44
More for detail, specifics & precision 49 50 60 55 48 45
Electronic is more for skimming and browsing 51 59 59 53 55 56
DIGITAL
Far easier to access 49 54 46 55 63 62
A wider array of sources 61 62 69 65 75 65
Tablet or smartphone saves me time 45 44 45 48 62 55
Immediate access to breaking news 53 52 62 57 63 61
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THE BUSINESSJOURNALSA DIVISION OF ACBJ
Nearly all SMB owners watch television during the evening and prime time, watching an average of 3 and 4 hours/week respectively
32“In an average week, how much time do you spend with each type of media or other activities shown below?”
Television Viewership by Daypart
54%
Early Morning(6am-10am)
Daytime (10am-6pm)
Evening (6pm-8pm)
Prime Time (8pm-11pm)
Late Evening(11pm or later)
Cable News (e.g,CNN, MSNBC)
89%
54%
68%
89%
68%
Average # Hours Use Per Week
1.8 2.0 3.1 3.9 2.2 2.9
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THE BUSINESSJOURNALSA DIVISION OF ACBJ
Nearly all SMB owners listen to the radio and spend 1.5 more hours doing so on a weekday, perhaps during their commutes to work
33“In an average week, how much time do you spend with each type of media or other activities shown below?”
Listen to Radio
92%88%
Weekday Weekend
Average # Hours
Use Per Week
3.6 2.1
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THE BUSINESSJOURNALSA DIVISION OF ACBJ
2018 will be a year of “Cautious Optimism”
1 SMB market is growing Number of SMBs is growingThey are expanding from the coasts
They remain a vital market in 2018
2 Optimism continues Confidence continues to riseRevenues are growingPersonal wealth is growing
They will be investing in their businesses while the economy is strong
3 Major concerns remain Difficulty finding qualified staffMaintaining their customer base
There’s an opportunity for marketers to address their concerns
4 Technology cuts both ways
Technology has enabled an expansionThey’re worried about data security
The benefits of technology must be balanced with safety assurances
5 Trust in journalism and local news is up
Local news sources are more trustedDigital and print are complements
Local business news is a trusted context for brand messages
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THE BUSINESSJOURNALSA DIVISION OF ACBJ
Contact
About The Business Journals:
The Business Journals is a division of American City Business Journals (ACBJ), the largest publisher of metropolitan business newsweeklies in the United States, with 43 business publications across the country reaching more than 3.6 million readers each week. We also offer specialty publications for sports fans, sports business readers and classic car enthusiasts.
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Amy InnerfieldAssociate Research [email protected]
Tyler ReavisResearch [email protected]