NYC-Area Businesses Face More Operating Challenges than in other Major Markets

McLean, Va. (September 29, 2015) New York City small business owners are feeling a little less optimistic about business conditions and prospects compared to earlier this year, 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. Forty-eight percent of NYC business owners surveyed reported business conditions to be excellent or good, on par with the national average of 49 percent.

The survey also found that NYC business owners are less optimistic than their counterparts in other major markets. While half (48 percent) of NYC respondents find current business conditions in their area to be excellent or good, this was significantly lower than the nearly two-thirds (65 percent) of San Francisco respondents, 60 percent of Washington, D.C. respondents, and 57 percent of Texas respondents who felt positive about business conditions overall.

'New York City business owners are facing more business challenges than their peers in other markets,' said Greg Smith, Senior Vice President, Northeast Small Business Banking at Capital One. 'As business owners deal with the highly competitive, expensive, and fast pace environment in New York, Capital One is dedicated to provide the technologies needed to effectively run a business.'

According to the survey, just over one-third (35 percent) of business owners in New York City reported improved financial positions over the past year. Even though financial growth expectations nationally have fallen since small business owners were last surveyed in March, 44 percent of business owners in New York City still expect to see improved financial positions in the next six months.

The latest Capital One Spark Business Barometer uncovered the following insights related to small business sentiment and plans for the future in New York:

It's more challenging to run a business in New York City than in other markets.

· Business owners in the New York area are considerably more likely than their peers nationwide to struggle with core challenges in running their businesses, with 70 percent of business owners indicating they've faced business challenges in the past six months - far more than their peers surveyed nationally (57 percent), in DC (56 percent), in Texas (59 percent), and in San Francisco (61 percent).

· Around two in five business owners in NYC cited that in the past six months they have had a hard time finding ways to operate more efficiently (43 percent), managing their business expenses (42 percent), or managing their cash flows (36 percent).

· NYC business owners were twice as likely to struggle with managing payroll in the past 6 months (20 percent) compared to the national average (10 percent).

With greater hurdles comes a higher demand for business solutions.

· Small businesses in New York City (56 percent) are the most likely to increase their budgets for business solutions in the next 12 months.

· Ninety-two percent of business owners who are planning on investing in business software solutions have faced a business challenge in the last six months. They are mostly struggling with finding ways to run their businesses more efficiently (70 percent).

· Minority-owned businesses are the most likely to increase their budgets to invest in business solutions in the next six months, with 80 percent stating that they would invest in at least one of the listed solutions, such as:

· Better technology for interacting with clients (45 percent)

· Online banking tools (42 percent)

Hiring is an indicator of financial performance and optimism:

· Employers that intend to hire new staff members in the next six months are more likely to be optimistic about their financial future during that time. Sixty-two percent of those who will hire expect their financial positions to improve (vs. 39 percent).

· Business owners that are planning on hiring new staff in the next six months are more likely to plan to increase their budgets to invest in any of the listed business solutions (70 percent vs. 52 percent of those not planning to hire).

Younger business owners find business conditions to be more favorable and are more willing to consider investments that will help their businesses:

· Business owners under the age of 50 are more likely to:

o Find their current business conditions as excellent or good (59 percent vs. 40 percent of those 50 and older)

o See improvement in their financial positions compared with one year ago (44 percent vs. 29 percent of those 50 and older)

· Baby Boomers, aged 50-69 years old, (75 percent) are more likely to identify a challenge they had faced in the previous six months than Gen Xers, aged 35-49 years old, (58 percent).

o In particular, Baby Boomers find it more challenging to manage cash flow than Gen Xers (44 percent vs. 26 percent)

Capital One also conducted similar research studies at the national level and within three other U.S. markets including the Washington, D.C. DMA, San Francisco 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 250 for-profit small businesses in the New York City 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 New York City 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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