BofA Finds 75% of Mid-Sized Businesses Expect Revenue to Increase in the Next 12 Months Despite Economic Challenges
Despite economic challenges, 75% of mid-sized business owners expect their revenue to increase and 71% are planning to hire over the next 12 months, according to the inaugural Bank of America Mid-Sized Business Owner Report (PDF). The study is based on a survey of more than 300 mid-sized business owners (MSBOs), with $5 million to $50 million in annual revenues, and focuses on their business and economic outlooks.
“The strength of mid-sized businesses is essential to the health of the U.S. economy,” said Raul Anaya, President of Business Banking at Bank of America. “Preparation, optimism, and flexibility are traits of successful leaders in this environment, with investments in the workforce and digital transformation topping their current list of priorities to remain resilient and position their businesses for growth.”
Operational Changes and Perspectives on Financing
MSBOs maintain a positive outlook, as 75% plan to expand their business, and 67% expect the national economy to improve over the next 12 months. Additional insights into mid-sized business operations and financing in the current environment include:
· Macroeconomic challenges in recent years, including inflation, the threat of a recession, and supply chain issues, are driving companies to make operational changes, such as raising prices (45%), revaluating cash flow and spending (37%), increasing employee wages (35%), and reducing business costs (33%).
· 90% of MSBOs plan to obtain funding to finance their businesses over the next 12 months, including through business credit cards (43%), traditional bank loans (38%), personal savings (27%), personal credit cards (25%), and venture capital funding (21%).
· Perspectives on financing are not one size fits all. For example, 59% of businesses say they’re looking to obtain financing to weather rising interest rates, while 23% say the rising interest rates make them less likely to seek financing.
· Among the more than half (54%) of MSBOs who plan to apply for a bank loan or line of credit in the next 12 months, they plan to use these funds to: invest in new technology (43%), invest in new equipment (37%), and market/promote their business (35%).
Digitization on the Rise
Over the last 12 months, 90% of MSBOs have adopted digital strategies to further optimize their businesses and operations, with new digital tools helping them to save time (48%), increase customer satisfaction (43%), manage cash flow (43%), stay organized (41%) and reach new customers (37%). Additional ways innovation is at play within mid-sized businesses include:
· 87% plan to further utilize automation and artificial intelligence to stand out from competitors (45%), assist with hiring (45%), and streamline payroll and bookkeeping (43%).
· As the use of digital wallets and cashless payments continues to grow in popularity, 76% of MSBOs anticipate that all their transactions will eventually be digital.
· 71% say the marketing of their business is now done primarily online or through digital-first channels.