There are almost 35 million small businesses in the U.S. and our region is home to many entrepreneurs. Phoenix ranked as one of the top cities for startups and Arizona as one of the top 10 states for business growth.
As we approach the midpoint of a decade that has brought solid economic growth and technological breakthroughs, despite a global pandemic and geopolitical conflicts, what are entrepreneurs focusing on? And what are they concerned about today? These are questions UBS set out to explore in its UBS Global Entrepreneur Report. The findings from this research may surprise you. They are also the key themes that many local businesses face today.
Following are some of the top findings from the report that offer insights on the current business environment and opportunities, concerns and needs of entrepreneurs as they look to the future.
- Entrepreneurs are optimistic Three-fourths of U.S. entrepreneurs are optimistic about their industries and the future. Looking forward, entrepreneurs overall anticipate that businesses will increasingly ramp up, perhaps as they prepare for what UBS calls the “5Ds of disruption” changing the investing landscape and creating risks and opportunities: deglobalization, demographics, digitalization and decarbonization.
- They’re investing globally in people, acquisitions and more. Most, namely 74%, of U.S. entrepreneurs believe the typical company in their industry plans to invest in personnel over 12 months; 51% expect an upturn in strategic acquisitions or partnerships, with potential for the bid-ask spreads to narrow. Fifty-one percent are upgrading equipment or machinery. Thirty percent say they expect to see typical companies increase investments in the next five years.
- But hiring still is an issue for companies.Sixty percent of U.S. entrepreneurs are having trouble hiring employees. Many of the entrepreneurs heard from anticipate not only investing more in people and acquisitions but also in providing incentives and training.
- They say AI is the technology offering the biggest commercial opportunity(57% in the U.S.). More than two thirds (66%) expect AI will lead to improved productivity; almost six in ten (57%) expect it to result in better customer service experiences; 46% see it leading to improved content creation and marketing materials, in the next five years.
- Their biggest risk concerns and greatest economic, market or policy dangers for their industries over 12 months are anticipated to be: political instability and/or uncertainty (49%), higher taxes (60%) and major geopolitical conflict (34%). Fifty-one percent of U.S. entrepreneurs also cite cybersecurity to have potential negative impacts.
- They often put their businesses over their personal financial needs. Interestingly, the report also reveals this common trend: Forty-eight percent of entrepreneurs say they have not built up private wealth outside of their businesses as much as they could. Often, they may be focused on starting and scaling their businesses and/or are focused on selling it. Perhaps one impact of this focus is that many do not prioritize their own personal private wealth.
What might area business owners and entrepreneurs consider, as a result of these findings? Optimism of entrepreneurs overall, as identified in the research, is fitting. As agents of change, entrepreneurs have a forward-thinking mindset, which means they can take innovations and apply them more widely. Technological innovation is what is needed to help spur greater economic development.
Given the research findings, entrepreneurs and business owners may want to consider greater usage of AI and how it can help with efficiencies, including in hiring, handling repetitive tasks, reducing time requirements and organizing or filtering data. Simultaneously, they might consider opportunities and training to focus on employee growth, nurturing and wellness beyond providing basic employment offerings.
Next, they may want to align with professionals in personal wealth-associated subject areas to make informed decisions on planning for taxes, growing through acquisition or looking to the future. In order to prioritize personal wealth, retirement and future happiness, having a financial advisor will help them to make this a priority. Eighty-three percent of U.S. entrepreneurs say they feel having guidance is especially important when investing.
Phoenix-based Stockton Schultz is a Financial Advisor, Managing Director, Wealth Management, of the Shultz Group at UBS Financial Services Inc. a subsidiary of UBS Group AG. Member FINRA/SIPC.
