More than three-quarters of private business owners (78 percent) said they have a solid growth strategy, according to a study from Pepperdine University’s Graziadio School of Business and Management. However, the study also shows only half of those owners (40 percent) have the necessary resources for growth such as staff and financial capital. According to the study, 71 percent would expect an increase in revenue if they were able to gain access to additional growth capital.
These findings were recently released as part of the Pepperdine Private Capital Markets Study (http://bschool.pepperdine.edu/privatecapital), a semi-annual investigation of the major private capital markets that examines the current state and outlook for the private capital industry.
“The study shows private business owners feel they are being constrained by access to financial capital,” said Graziadio Professor John Paglia. “Owners currently expect a ten percent revenue growth over the next 12 months. If they were to receive additional capital, they estimate their revenue growth rate to jump to 25 percent.”
Furthermore, the study asks owners to compare current operational and industry items to those six months ago and found significant changes including:
- 63 percent reported an increase in opportunities for growth
- 40 percent reported a decline in access to growth capital
- 55 percent reported an increase in competitive pressures
- 44 percent reported a decline in their confidence in the economy
Nearly 31 percent of the business owners surveyed reported “access to growth capital” as being the top business issue today, the most of any category. Second to access to capital, private business owners cited the “economic environment” as the next highest business issue (27 percent).
While they are particularly vulnerable to economic conditions, almost all private business owners (85 percent) reported receiving non-economic rewards from owning their own businesses. Of those rewards, the most common was independence and flexibility (54 percent) with enriched experiences (25 percent) and ability to influence (20 percent) rounding out the top three.
The Pepperdine Private Capital Markets Study’s private business owner data is based on interviews with 559 business owners and is part of a larger study based on interviews with more than 1,436 professionals in the private capital industry. Approximately 25 percent (24.6 percent) of businesses are in the service industry followed by technology (14.4 percent), finance (12.7 percent), and manufacturing (12.2 percent). Respondents are geographically dispersed throughout the United States. Over 26 percent of respondents report that their companies have been operating for more than 20 years followed by 17.9 percent with 10 to 20 years and 18.4 percent with five to 10 years of operation. All respondents are owners of their companies and 61.9 percent of them are active owners with greater than 50 percent ownership.
