2017 PREDICTIONSGrowth Industries and Locations,

Plus the Topics that Will Matter Most

SMB owners most optimistic in 9 years

2

78%

56%

32%35%

52%

65%

77%75% 75%

77% 76%73% 73%

81%79%

82%

Jan 08 Aug 08 Oct 08 Mar 09 Aug 09 Nov 09 Dec 09 Jan 10 Nov 10 Dec 10 Dec 11 Dec 12 Jan 14 Jan 15 Jan 16 Jan 17E

Positive Outlook About Future Business Prospects

Source: The Business Journals SMB Insights (Base: Businesses with 5-499 employees); 3%-4% difference between years is statistically significant. Q: “How do you think your

company’s prospects will change over the next 12 months? By prospects, we mean the general success of your business.” (2008-2013) “What is your level of confidence in the

success of your company (based on revenue, profitability & growth) over the next 24 months?” (2014-2017); E=predicted estimate/preliminary data from SMB Insights 2017

The Business Journals’ latest SMB Insight study was fielded the day after the Presidential election. According to

preliminary results (400 completed interviews), small and mid-sized business owners are continuing to feel confident in

the future success of their companies. It is one of the highest levels seen to date.

Business growth, post-recession, occurred in the 50 largest MSAs. Given the current sentiment, it will continue in 2017.

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According to the latest Census Bureau data, the top 50 MSAs (Metropolitan Statistical Areas) in the U.S. are home to two-thirds of all

businesses nationwide. Seventy-four percent (74%) of these 50 markets experienced business establishment growth between 2009

and 2014, contrasted by far fewer growth markets among smaller MSAs (35%).

Source: Census Bureau, Business Dynamic Statistics, 2014 data released September, 2016. Includes all business establishments with 1 or more employees.

Austin +15.3% Washington, DC +4.7% New Orleans +1.8% Indianapolis -0.2%

Miami +11.26% Portland +4.4% St. Louis +1.7% Buffalo -0.2%

Houston +8.7% San Diego +3.6% Minneapolis +1.7% Philadelphia -0.5%

Dallas/Ft. Worth +7.1% New York +3.5% Kansas City +1.6% Detroit -0.7%

Orlando +6.8% San Francisco +3.4% Phoenix +1.1% Louisville -0.9%

San Antonio +6.4% Los Angeles +3.3% Chicago +0.6% Birmingham, AL -1.9%

Raleigh +5.5% Charlotte +3.1% Baltimore +0.5% Providence -2.2%

Tampa +5.4% San Bernardino +2.6% Pittsburgh +0.5% Hartford -2.2%

Salt Lake City +5.3% Jacksonville +2.5% Sacramento +0.4% Cleveland -2.5%

Oklahoma City +5.1% Boston +2.3% Richmond +0.2% Norfolk/Virginia Beach -2.5%

Las Vegas +4.9% Nashville +2.0% Columbus, OH +0.01% Cincinnati -2.7%

San Jose +4.8% Seattle +2.0% Milwaukee -3.5%

Denver +4.7% Atlanta +1.9% Memphis -3.5%

Top 50 MSAs(Percentage Change in the Number of Business Establishments, 2014 V. 2009)

40%

43%41%

45%47%

46%

51%

2011 2013 2015 2017E

SMB Corporate Responsibility(Percentage SMBs that ‘Strongly Agree’)

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Businesses today have a

responsibility to address key social

& environmental issues

Working to make

‘sustainability’ an integral part

of our products/services

Sources: 1KPMG Currents of Change: The KPMG Survey of Corporate Responsibility Reporting, 2015, the top 100 largest companies in the U.S. CR reports include areas such

as ethics, employee development & diversity, helping the community, the environment, and sustainability in the supply chain; The Business Journals SMB Insights, Q:

“Following are a series of statements which may/may not reflect how you think about business, or life in general. Please indicate whether you agree/disagree with each one.”

E=predicted estimate/preliminary data from SMB Insights 2017

SMBs emphasizing corporate responsibility for 2017

Today nearly all of the top 100 U.S. companies have Corporate Social Responsibility (CSR) programs.1 The SMB market which

has historically lagged in its concerns about sustainability and social responsibility is now facing these issues.

2017 is the year of the Latino entrepreneur

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Number, Employment & Revenues of

Hispanic-Owned Businesses

Other Services = professional, business & civic services, repair & maintenance services, personal & laundry services, etc. 1State of Latino Entrepreneurship, 2015 Research

Report, Stanford Latino Entrepreneurship Initiative; Sources: US Census Bureau, Survey of Business Owners (published 8/18/15); Base: All US Non-farm businesses operating in

the 50 states and District of Columbia. (NOTE: 2017 projected using 2012 vs. 2007 growth rates); Hispanic Businesses & Entrepreneurs Drive Growth in the New Economy, 2015.

$222

$351

$474

$6401.6M

2.3M

3.3M

4.8M

1.5M

1.9M

2.3M

2.8M

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

2002 2007 2012 2017 (Projected)

Tota

l S

ale

s R

eceip

ts in B

illio

ns o

f D

olla

rs

Mill

ions o

f B

usin

esses &

Paid

Em

plo

yees

Revenues Number of Businesses Paid Employees

With the sales of Hispanic-owned businesses estimated to reach $640 billion, and the number of businesses projected at

nearly 5 million, 2017 is clearly the year of the Latino entrepreneur. The Hispanic-owned business growth rate (40%+) is

three times the national average “suggesting that Latinos play a substantial role in local job creation and economic

development.”1

Leading Industries Among

Latino-Owned Businesses

3%

10%

4%

9%

15%

9%

10%

7%

13%

3%

4%

7%

8%

8%

11%

14%

16%

17%

Accomodation & food services

Real estate/renting & leasing

Transportation & warehousing

Retail trade

Professional, scientific & technical

Health care & social assistance

Construction

Administrative support

Other Services (see footnote)

Latino-Owned Businesses Non Latino-Owned Businesses

Mobile growing, but traditional ad efforts still fuel SMB marketing

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Source: 1eMarketer, Digital Ad Spending to Surpass TV Next Year, March 8, 2016; The Business Journals SMB Insights, Q: “What percentage of your total weekly time taking in

business news or information is accessed via smartphone, tablet, computer or a print publication itself?” “Which of the following marketing & advertising vehicles has your company

used in the past 12 months?” “Which of the following will your company use more of in the next 1-2 years?” E=predicted estimate/preliminary data from SMB Insights 2017

SMBs’ Personal Use of Smartphones to

Access Business News/Information

57%

75%83%

2015 2016 2017E

It is projected that mobile advertising spending in 2017 will reach $53 billion, nearly double the $31 billion spent in

20151. SMB owners are clearly end users of this movement -- 83% now use their smartphones to access business news

and information. However, when reaching their own customers, traditional channels continue to dominate. Mobile

advertising has yet to take off among SMBs.

SMB Marketing Vehicles

Current Use/Use More of Next Several Years(Based on Preliminary 2017 Insights data)

12%

23%

22%

26%

10%

26%

27%

35%

Mobile advertising

Direct mail

Trade shows & events

Print advertising

Used Past Year Plan to Use More Next 1-2 Years

SMB owners’ concern about health insurance costs is expected to increase

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Source: 1Kaiser Family Foundation, Analysis of 2017 Premium Changes and Insurer Participation in the Affordable Care Act’s Health Insurance Marketplaces, June 28, 2016

The Business Journals SMB Insights (Base: Businesses with 5-499 Employees); Q: “What are the issues that you’re most concerned about related to running a business?”

“How does your company currently share the cost of health insurance with its employees?” E=predicted estimate/preliminary data from SMB Insights 2017

SMBs ‘Very Concerned’ About the Cost of

Health Insurance & Employee Benefits

With healthcare premiums slated to rise in 2017 by as much as 10%1, business owners’ costs will also increase. The

large majority (72%) pay for most or all of their employee healthcare costs.

How SMBs Share the Cost of Health

Insurance with Employees

26%Company pays all

46%Company pays most

22%Shares cost equally with employees

7%Employees pay most/all

expense

72% 69% 70%63% 60%

53%59% 63%

2010 2011 2012 2013 2014 2015 2016 2017E

72% of SMBs pay most or all of employee health

insurance costs

More than half a million SMBs will shut down in 2017 because of cyber security breaches

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Sources: 1Symantec Internet Security Threat Report 2016; 2National Cyber Security Alliance 2016; Bank of America SBO Report 2015; The Business

Journals SMB Insights; E = predicted estimate/preliminary data from SMB Insights 2017

It’s not just big firms like Target or Home Depot that need to worry about cyber security. Forty-three percent (43%) of all

cyberattacks target SMBs.1 Not surprisingly, our data shows they are increasingly concerned about the safety of their

company’s technology and files. Most SMBs don’t have in-house experts to deal with breach issues, and the average recovery

cost is $36,000. Sadly, 60% end up having to close their doors within six months of the breach2. In 2017, this could add up to

550,000 business failures.

Number of Businesses

with 1-999 Employees7.6 Million

Victims of a cyber

security breach12%

Close their doors within

6 months of the data

breach

60%

Estimated Number of

Closings550,124

SMBs’ Concern About

‘The Safety & Security of Their Firm’s

Technology, Email & Documents’

41%50%

30%

28%

2009 2017E

Somewhat

Concerned

Very

Concerned

71%

78%

Impact of Cyber Attacks

on Small & Mid-Sized Businesses

Health care, accommodations and professional/tech services are driving the greatest growth among SMBs

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Percentage Change in Number of SMB Business Establishments by Industry(2014 Vs. 2008)

Source: Census Bureau, County Business Patterns, 2014, Geography Area Series. Released April 21, 2016. Includes all business establishments with 1-499 employees.

GROWING INDUSTRIES DECLINING INDUSTRIES

% Change # of Businesses % Change # of Businesses

Educational Services +12.2% 98,462 Trans/Warehousing -1.6% 219,590

Healthcare/Social Asst +8.1 851,272 Information -2.3 137,501

Accommodations +6.7 678,630 Wholesale Trade -3.0 415,892

Utilities +5.9 17,962 Retail Trade -3.2 1,065,066

Arts +4.5 129,498 Finance & Insurance -6.2 469,455

Prof, Science, Tech Services +4.1 881,491 Manufacturing -10.3 289,684

Management of Companies +3.8 52,631 Construction -13.8 666,651

Other Services +1.3 739,724

Administrative +1.1 395,409

Real Estate +0.4 366,955

With Millennials making up the largest share of the workforce, SMB owners will need to focus on meeting their needs

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U.S. Workforce by Generation

Source: 1Bureau of Labor Statistics; 2Monster Multi-generational survey January, 2016; 3Business Insider, Millennials Want Co-workers to be a Second Family, 2015

By 2020, Millennials will account for half of all workers.1 Most Millennials expect the workplace to be a fun, social place and feel

entitled to set their own schedules.2 Compared to older boomer-aged employees, Millennials are looking for work with a greater

purpose (45% v. 33% for Boomers)3. Salary alone is not enough!

Millennials(1981-1997)

Boomers(1946-1964)

Gen Xers(1965-1980)

Gen Zers(1998-)

Traditionalists(1945 or earlier) 2% 2% 1%

32%27%

22%

21%21%

20%

43%45%

50%

2%5% 7%

2015 2017 2020

Millennials’ Attitudes Towards Work

63%

81%

88%

Motivated by money

Should be able to set my ownwork schedule

Want a fun, social workenvironment

CONTACT

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Research:

Jessie Shaw, Vice President

212-500-0611

jessieshaw@bizjournals.com

About The Business Journals:

The Business Journals is a division of American City Business Journals (ACBJ),

the largest publisher of metropolitan business newsweeklies in the United States,

with 43 business publications across the country reaching more than 3.6 million

readers each week. We also offer specialty publications for sports fans, sports

business readers and classic car enthusiasts.

mailto:jessieshaw@bizjournals.com