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Some 85 percent of small business owners are in a better or similar financial position to 12 months ago and are overwhelmingly positive about their financial future, according to a new report released by American Express today.
For those owners expecting to trade during the next three-years, revenues are projected to grow by an average of 31 percent. This equates to an average revenue increase of $160,000 per year.
The Economy of Shopping Small: Custom Counts, a report commissioned by American Express in support of this year’s Shop Small campaign, found this bullish outlook is set against a more challenging consumer retail landscape.
While over a third of respondents increased their frequency of shopping small in the past 12 months, 61 percent ramped up their custom with large businesses in the same time period. Simultaneously, 1 in 4 consumers decreased the number of trips they made to small businesses, compared with less than 1 in 12 for large outlets.
Katrina Konstas, Vice President Small Merchant at American Express, said Australians must convert affection into action – especially the growing number of Australians which see a future for themselves in the sector.
“Small businesses continue to adapt and evolve in this new retail environment; however the increasing proportion of national and online retailers represents a real threat. They have undermined some of the traditional strengths of small businesses, such as convenience and location, and it’s critical that consumers continue to shop small for this sector to prosper.
“Whether we realise it or not, small businesses have made ongoing valuable contributions to the world around us. For example, half of Custom Counts respondents who have worked in a small business said the experience had been pivotal in their career or academic success, and 70 percent of all respondents attribute their sense of belonging to the community around them. Some of these relationships go back generations, with one in eight respondents aged 65 or over still using businesses their families used before them.”
This positive shopkeeper outlook is consistent with recent shopkeeper growth. According to the Australian Bureau of Statistics, the number of businesses with between 1-19 employees grew by 3.5 percent between 2014 and 2015.
Other key findings from The Economy of Shopping Small: Custom Counts included:
- Overall, small business owners are content: 83 percent of small business owners are satisfied, and only 10 percent wouldn’t go into business again; only 8 percent say it hasn’t lived up to their expectations.
- But their commitment sometimes comes at a cost: For every 2 small business owners that say small business has had a positive impact on their wellbeing, 1 reports a negative deterioration of mental health, physical health or home life. Almost half say running a small business has had an adverse effect on their personal time.
- The landscape will continue to be dynamic: almost a third of individuals do not intend to be running their business five years from now; while 56 percent are planning on staying the course for next ten years and have significant plans for the future.
Business outlook also bright for younger business owners
An important finding from Custom Counts was the optimism amongst young small business owners. 35 percent of small businesses in Australia are today run by people under 35.
Interestingly, younger business owners were much more likely to believe broader social commitment played a key role in consumer preference. For example, some 85 percent of shopkeepers under 30 said environmental concerns influenced purchasing decisions.
Multi-generational merchants bolster small business
Multi-generational businesses also continue to play an important role in the small business community. Custom Counts found 17 percent of small business owners said their parents had also been shopkeepers.
Children of shopkeepers typically had a more pragmatic business outlook than other small business owners, being less worried about issues such as increased competition, staff retention, quality of service and supplier issues. They were also significantly more likely to encourage their children or other loved ones to run their own small business, and 50 percent said running a business had a positive impact on their family life.
Multi-generational business owners also highlighted the importance of a family focus in running their business:
- Two thirds of multi-generation business owners said being a family business was an important factor in influencing customer’s purchasing decision.
- Some 58 percent had inherited their business, while 60 percent still operated their business alongside family members today.
- Typically multi-generation business owners started running their business at a younger age – 34 years-old, compared with 44 years old for other small business owners – with nearly half coming straight from school or University to running their business.
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