Insights from Wilmington Trust Business Owners Reveal Declining Confidence, Need for More Technology Investments Stimulates the Early Retirement Exodus
WILMINGTON, Del., April 22, 2021 / PRNewswire / –
- The number of homeowners pessimistic about the future of the US economy doubles March 2020 level; only 24% express their optimism
- About half of homeowners expect lower or stable incomes in 2021 compared to the pre-pandemic period
- Confidence in achieving corporate financial goals increases from 57% to 34%
- The number of homeowners who say they plan to retire earlier has increased by more than 100% since last August
- One-third of business owners had to increase their investment in technology to meet new customer needs
- Entrepreneurs of color 43% more likely to have trouble applying for PPP loans
Wilmington Trust’s most recent Quarterly Business Owner Report, developed in conjunction with its parent company M&T Bank, finds that business owner confidence has fallen almost 30% in less than a year. As many owners struggle to ensure their businesses are successful during a volatile time, the number of those planning to retire earlier than expected has doubled with a surprising 110% increase. The study, The rush to retire, surveyed 1,007 business owners nationwide, comparing large and small businesses, while also focusing on Entrepreneurs of Color (EOC) to examine their perspectives and experiences.
Declining confidence and rapid digital adaptation are leading to accelerated retirement plans
The pandemic has taken its toll on business owners, with the latest business owner confidence index dropping from 59 points just before the pandemic to 42 in early 2021. The number of business owners pessimistic about the future of business US economy has almost doubled since March 2020. In addition, around half of owners expect lower or stable incomes in 2021 compared to pre-pandemic figures, while their confidence in achieving their business’s long-term financial goals has increased by 57%. at 34%.
Another challenge for owners has been to increase digital investments to respond to changing consumer behaviors. In an attempt to stay ahead of these changes, a third of entrepreneurs increased their investments in technology during the pandemic. Their main priorities are e-commerce (39%), global technology equipment / infrastructure (38%), social media (33%) and digital advertising (28%). However, the increased emphasis on technology and the necessary investment can give older owners doubts about how long they will be at the helm.
Rushing to retire
Many homeowners offer retirement or bridging plans. Since August 2020, the number of large business owners planning to retire earlier than expected jumped 110%, while the number of small business owners doubled. In addition, their confidence in passing their business on to a successor is eroded. In March 2020, half were very confident that their personal and business assets would be well managed if they were to die or become unable to manage them. In our last poll, only 34% said the same.
“We strongly recommend that owners take this time to review their long-term business and personal planning,” said Stuart A. Smith III, National Director of Business Value Strategies for Wilmington Trust and M&T Bank Emerald Advisory Services®. “To upgrade their technology, they may need to seek outside investment in the most profitable way possible, which will impact their valuation. But if they are really burned out and want to retire or sell sooner, they’ll need a Beware of the quick and dirty exit plan, as it’s usually both. “
Paycheque Protection Program (PPP) and continued efforts for greater diversity among business owners
The Business Owners’ Outlook study also found that significant gaps remain between entrepreneurs of color and non-minority business owners (NMOs). When engaging in the Paycheck Protection Program, EOCs are 43% more likely to experience issues when applying than NMOs. Business owners ranked their top three issues as follows: producing documents for loan applications and remission (46%); access the application online (45%); and difficulty understanding loan forgiveness terms (43%).
Additionally, 92% of EOCs cite diversity as very or somewhat important, but only 70% of NMOs think the same. A greater number of COEs (91%) also stress the importance of working with external partners who act on diversity than their ONM counterparts (70%). Overall, our data shows that about a third (30%) of ONJs say that diversity is not very or not at all important.
“We know that entrepreneurs of color continue to face challenges in securing capital for their businesses, with the pandemic exacerbating these conditions,” said Detra miller, Head of Banking Services for Minority and Women-owned Businesses, M&T Bank. “It is important that they work with an experienced banker whom they can trust to help them discover new networks, identify solutions to optimize cash flow, establish new extended lines of credit and set up payment deferrals or explore alternative financing options if necessary. “
A recent webinar hosted by Wilmington Trust and M&T Bank and focused on the study results and highlighted the stories and perspectives of business owners, including how they reacted to the US economic outlook , their transition planning and technological adaptation.
The webinar and the full report can be viewed here: https://library.wilmingtontrust.com/z-featureditems/featured-1/1q-2021-business-owners-outlook-the-rush-to-retire
Survey methodology: Business owners with annual revenue of $ 1 million and more were asked to complete an online questionnaire to find out their perspective on the US economy, the state of their business, and future plans. of their business and the impacts of the COVID-19 pandemic. The investigation took place January 25 to February 10 among 1,007 business owners, including 228 who identify as people of color.
About Wilmington Trust
Wilmington Trust’s Wealth advice offers a wide range of personal trust, financial planning, fiduciary, asset management, private banking and family office services designed to help high net worth individuals and families develop, preserve and transfer their wealth. Wilmington Trust is focused on serving families with whom it can build long-term relationships, many of which span generations.
Wilmington Trust also provides Corporate and institutional services for customers all over the world.
Wilmington Trust has clients in all 50 states and many countries, with offices all over the place United States and internationally in London, Dublin, Paris, and Frankfurt. For more information visit www.WilmingtonTrust.com.
About M&T Bank
M&T Bank Corporation is a financial holding company headquartered in Buffalo, New York. M&T’s main banking subsidiary, M&T Bank, operates bank offices in new York, Maryland, New Jersey, Pennsylvania, Delaware, Connecticut, Virginia, West Virginia, and the District of Colombia. Trust related services are provided by affiliates of M & T’s Wilmington Trust and by M&T Bank.
Wilmington Trust is a registered service mark used in connection with various fiduciary and non-fiduciary services offered by certain subsidiaries of M&T Bank Corporation. This material is for informational purposes only and is not intended to be an offer, recommendation or solicitation for the sale of any financial product or service. © 2021 M&T Bank Corporation and its subsidiaries. All rights reserved.
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SOURCE Wilmington Trust