Making growth a priority and leveraging social media are just two of the factors setting successful small businesses apart from peers on the brink of bankruptcy, a new study finds.
Research from American Express OPEN examined the characteristics that separate high-achieving small business from those that are either struggling or striving to be successful. The study lays out the characteristics of the companies that rank highest on American Express’ Small Business Owner Success Index, which measures business growth andthe business owners’ mindsets in their approach to their venture’s success. Successful businesses have been open more than 25 years, employ 18 people and have attained business growth of 34 percent over the past three years, which is more than three times the rate of the average business.
A willingness to take risks is one area that sets successful businesses apart. The study found that more than two-thirds of the most prosperous companies have increased their appetite for risk in the last year, compared to just 35 percent of all businesses.
High-achieving companies also place a priority on growing their businesses. More than 90 percent plan to expand over the next six months, compared to just 69 percent of those businesses that are struggling or still striving for success. In addition, more than three-quarters of the most successful companies plan to make capital investments this year, compared to less than half of all businesses.
The use of social media is also more common among top businesses, with nearly 80 percent leveraging Facebook and other social networks to attract new customers, compared to only 57 percent of all businesses.
The research shows that, as a whole, small business owners feel more confident this year. Compared to a year ago, entrepreneurs have fewer cash flow problems and say they are less stressed by a turbulent economy.
"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," said Susan Sobbott, president of American Express OPEN.
The study was based on surveys of more than 800 small business owners and managers of companies with fewer than 100 employees.