Small-business owners are less stressed but cautious. According to the latest findings of the American Express OPEN Small Business Monitor, small-business owners’ top priority is maintaining their current businesses and sources of revenue (32 percent) rather than making growth plans. Those same business owners are neither planning to hire nor fire employees over the next six months. Hiring plans have decreased from 35 percent in the spring to 29 percent this fall, with 16 percent saying the economy caused them to lay off employees, down from 21 percent six month ago.
“In many ways, our research on small-business sentiment mirrors economic indicators on the consumer front—confidence and optimism gauges are showing positive signs, but there is a sense that people are not willing to go all-in until after the elections,” says Susan Sobbott, president of American Express OPEN. “To help small-business owners navigate this uncertain time, we decided to zero-in on the small businesses that weathered the great recession and came out firing on all cylinders—we want to know what can be learned from the high achievers that will help create more of them?’”
For the first time, the semi-annual survey, now in its 11th year, includes a Success Index to identify commonalities across successful businesses that can provide lessons for any small business. The index profiles four groups of entrepreneurs: high achievers, strivers, sustainers and strugglers.
What’s the Secret Sauce to Success?
High achievers represent 6 percent of the total survey sample, and on average, have spent 26 years in business, employ 18 people in their firms and have attained business growth of 34 percent over the last three years (versus 10 percent growth for the total survey population).
A comparison between the high achievers and the total survey group uncovers a host of key differentiators:
They take more risks. More than two-thirds have increased their appetite for risk compared with one year ago (67 percent versus 35 percent of the total population).
They don’t just plan for growth, they make it a priority. A majority of high achievers say they are planning to grow their businesses over the next six months (93 percent, versus 69 percent of the total survey group) and more than half (51 percent) have growth as their top priority (versus 31 percent of the total survey group).
They invest in their business. More than three-quarters (78 percent) are planning to make capital investments (versus 49 percent of the total survey group).
They provide incentives to customers to get repeat business.
Some 84 percent are placing heightened focus on better serving customers to set their business apart from competitors (versus 78 percent overall).
And 40 percent offer loyalty rewards (versus 22 percent overall).
Finally, 41 percent offer differentiated products or services (versus 23 percent overall).
They leverage social media. We found that 7 in 10 use social media (70 percent versus 49 percent overall) and more than three quarters (79 percent) use social media to attract new customers (versus 57 percent overall).
The Success Index was developed based on self-reported responses to questions regarding business growth and characteristics correlated with high-performing entrepreneurs. Based on a 100-point scale, four distinct levels emerged: “Strugglers” (scoring between 0-40 points), “Sustainers” (scoring between 41-60 points), “Strivers” (scoring between 61-80 points) and “High achievers,” who scored highest on the Index (between 81-100 points).