Access to seed money and working capital is still a major challenge for minority-owned businesses.
For new businesses, especially those that are minority-owned, having access to working capital–which is used to keep operations going and to pay bills–could mean the difference between the success and failure of that business.
Growing a business and accessing working capital are major concerns for most business owners, reports the inaugural American Express OPEN Small Business Growth Pulse. A large majority, 72%, of small business owners are prioritizing growth, according to the survey of 1,000 small businesses with $250,000 or more in annual revenues.
“Access to working capital becomes critically important as small businesses look to pursue both expected and unexpected opportunities to grow their business.” However, growth itself has both positive and negative connotations for small business owners, as almost half (or 49%) say that generating ideas for growing their business “keeps them up at night,” followed closely (36%) by concerns about cash flow issues. An overwhelming majority (93%) say they are confident they can access the funding they need to grow their business.
Janey Whiteside, SVP & GM customer marketing & relationship management, American Express OPEN, noted in a statement that “when considering options to help fund their business, surveyed small business owners reported that low fees and interest are the most important factor, followed by trust and security of the provider and easy access to funds.”
Nearly half of all business owners say they have grown their business significantly since its inception. Among those who have experienced growth, 4 in 10 say the majority of their growth has been planned, while less than 3 in 10 say their growth was organic or spontaneous. While small businesses are prioritizing growth, the approach they take to pursue it varies. The most popular approach is a cautious one.
Business owners recognize that customers are a vital ingredient in their recipe for growth, with 26% of survey respondents saying that increasing customers is the most important aspect of business growth, followed closely by increasing revenue at 24% and increasing profits at 23%. When looking at avenues to pursue growth, one-third cite expansion into new markets and diversifying products and services as their largest growth opportunities.
The survey also revealed that mentoring and partnering are key to business growth. Roughly half reported proactively seeking out opportunities for growth by networking with like-minded small business owners and business experts. In fact, 41% indicated networking yields the greatest return for growth compared to marketing or advertising activity.