Research reveals favorable business conditions in Bay Area, but surprisingly few plans to investing for the future

McLean, Va. (September 29, 2015) - Bay Area business owners are feeling exceptionally positive about business conditions and future forecasts, according to Capital One's Spark Business Barometer, an ongoing survey measuring the economic perceptions and financial conditions of small business owners, as well as the most common trends and challenges facing entrepreneurs and local businesses. Sixty five percent of SF business owners surveyed report business conditions are excellent or good, 16 percentage points higher than the national average. Additionally, 47 percent expect their financial positions to improve within six months, compared with 38 percent of business owners nationally. Only four percent of business owners foresee a downturn in their financial position in the next six months.

'It is great to see that optimism across business owners in San Francisco is up and many expect their businesses to grow in the next six months,' said Dave Talach, SVP and Head of New Ventures, National Small Business at Capital One. 'Businesses in the Bay area need to be focused on investing in technology solutions designed to help them grow as markets stabilize. The good news is that SF-based business owners remain optimistic about their futures and it is important they take that optimism and reinvest back in their businesses. At Capital One, we are committed to developing solutions that address the unique challenges business owners face today.'

The optimism in SF may be related to the steady sales seen in the first half of the year. According to the survey, more than three-quarters (77 percent) of small businesses surveyed maintained or increased their sales levels during the past six months, and 86 percent have found their financial positions to be the same or better than they were a year ago.

Fifty percent of firms are looking to invest in solutions that support their businesses in the next 12 months, compared to 41 percent nationally. However, in a city reputed for the technological prowess of its innovative startups, small businesses in the San Francisco area are no more likely than other surveyed regions around the country to invest in technology-based business solutions.

The latest Capital One Small Business Barometer uncovered the following trends related to small business sentiment and plans for the future in SF:

Younger business owners in San Francisco expect stronger growth:

· SBOs under the age of 50 are significantly more likely to have cited an improvement in their financial positions over the last year (50 percent) than older business owners (32 percent).

· They also are more likely to expect to benefit from increased holiday sales compared to 2014 (40 percent vs. 23 percent).

· Owners under the age of 50 are more likely to increase the size of their workforce in the next six months (35 percent vs. 22 percent of those 50 or older).

Hiring is driven by strong financial performance. Employers that are planning on hiring new staff members in the next six months are more likely to:

· Find business conditions in their area as excellent or good (78 percent vs. 61 percent)

· Experience an increase in sales in the last six months. Seventy-one percent of those who will hire saw recent sales improvement (vs. 37 percent).

· Expect their financial position to be better in the next six months (63 percent vs. 41 percent).

SF-based minority-owned and women-owned businesses are feeling the impacts of business challenges:

· A significant number of minority-owned businesses (64 percent) claimed that they struggled with managing business expenses.

· Fifty-one percent of minority-owned businesses admitted to having trouble finding ways to run their businesses more efficiently.

· Both minority-owned businesses (26 percent) and women-owned businesses (20 percent) stated that they had a hard time getting a line of credit, compared with just 12 percent of the total business owner population in San Francisco.

Capital One also conducted similar research studies within four U.S. markets including the New York City DMA, San Francisco DMA, Washington D.C. DMA and the state of Texas.

Capital One is committed to understanding the challenges, trends and perceptions that affect small businesses' overall performance and day-to-day operations. Follow along on Facebook at Capital One Small Business and on Twitter at@CapitalOneSpark . Use hashtag #SparkBizBarometer to follow the conversation.

Survey Methodology

The following presents a summary the methodology used to execute Capital One's 1H 2015 Small Business Barometer Survey, conducted by the market research and business intelligence firm ORC International. For this telephone study, ORC interviewed a sample of 251 for-profit small businesses in the San Francisco DMA. Small businesses are defined as those with total annual revenues less than $10 million. Interviews were conducted from July 15 - August 3, 2015. One respondent per business was interviewed. The margin of error is +/- 6.2 percentage points at a 95% confidence level.

The initial sample for this study was constructed using a random selection from the extensive business database maintained by Infogroup, Inc., and drawn to be representative of qualifying small businesses throughout the San Francisco DMA by industry and employee size. To compensate for variation in response rate among different types of businesses, final data were weighted by gender and industry to help ensure the final results are proportionally representative of the small business population in that area.

About Spark Business

Capital One® offers a broad spectrum of financial products and services to consumers, small businesses, and commercial clients. Spark Business from Capital One comprises a suite of products and services specifically designed for small business, including credit cards with unlimited rewards, no-fee checking and savings, and secure and flexible merchant service offerings. Spark Business provides tips, resources, and inspiration to help your business thrive atwww.SparkBusinessIQ.com . For more information, visitwww.capitalone.com/smallbusiness .

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