Small businesses foresee growth in 2016

Monday 21 December 2015

New research has suggested that small businesses are expecting their revenues to grow in 2016.

According to the Small Business Pulse Survey, conducted by Yelp, companies of this size are forecasting more than a quarter (26 per cent) increase in growth in the year ahead.

It found that the majority of small businesses using Yelp (85 per cent) expect their revenues to grow in 2016. Young companies are the most optimistic, with nearly half (48 per cent) predicting expansion in the next 12 months.

"Small businesses are an important part of the economy. They provide roughly half of all private sector jobs, and also provide direct benefits to the communities that get to enjoy their goods and services," said Harvard University professor of business administration and Yelp's economist in residence, Michael Luc.

He said it was interesting to look into the minds of small business owners, to see how they're feeling and it found that they are clearly optimistic, which is consistent with relatively strong consumer sentiment and a recent uptick in retail sales.

However, although many small businesses are feeling optimistic, there are still a number of challenges being faced by people in this sector. Companies of this size are worrying about the cost of healthcare and keeping to minimum wage regulations.

The research suggests that the biggest concern for small businesses is being able to develop competitive growth strategies.

Some of the other challenges that SMEs face are troubles that companies of all sizes have to overcome, with 60 per cent of those surveyed by Yelp worrying about attracting and keeping their customers.

Managing a limited marketing budget (32 per cent) and competition from larger businesses (30 per cent), were also cited as obstacles for growing their brand.

Less than a fifth (18 per cent) of businesses identified time spent on non-core business elements as the main disadvantage of running a small business.

"Small businesses worry about their own ability to grow, even as they remain optimistic," added Dr Luca. "Health care and other concerns, while important, seem to be less of a problem for many small businesses as they prioritise growth."

 


By Victoria McDonnell

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