The majority of American small businesses are optimistic about 2016, according to a survey from Yelp, the company that facilitates crowd-sourced reviews of local businesses. The first-ever Small Business Pulse survey found that 85% of small businesses active on Yelp expect their revenues to grow next year, by an estimated increase of 26%. Younger businesses were the most enthusiastic, predicting growth of 48% in 2016, according to the survey.
“This group of businesses is clearly optimistic, which is consistent with relatively strong consumer sentiment and a recent uptick in retail sales,” said Michael Luca, a Harvard University professor of business administration and Yelp’s economist in residence.
Despite the optimism, small businesses say that they currently face many challenges. Those surveyed by Yelp were particularly concerned about developing competitive growth strategies: 60% of businesses said attracting and retaining customers was their greatest challenge, 32% chose managing a limited marketing budget, and 30% were worried most about competition from larger businesses. Neither health care nor minimum wage concerns made the top of the list, Luca said, adding that those issues, “while important, seem to be less of a problem for many small businesses as they prioritize growth.”
Other findings from the survey include a ringing endorsement of digital marketing tools, with 85% of those polled saying such tools have helped them grow their customer base. Nearly all use some form of digital marketing, with 75% using social media platforms, 48% taking advantage of consumer review platforms and 48% purchasing search engine advertising. According to Luca, the so-called “feedback economy” has leveled the playing field and empowered small businesses. “Back when billboards and Super Bowl ads seemed like the only way to reach customers, small businesses were more constrained, but things have changed dramatically,” he added.
With the help of Wakefield Research, Yelp polled 901 self-selected small-business members in industries as diverse as food service, retail, health, medicine and home services about their needs in a changing economy.