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Yelp: 85% of Small Businesses Predict 26% Revenue Growth in 2016

Small business owners in the U.S. are feeling decidedly optimistic about the year ahead.

According to Yelp’s first annual “Small Business Survey,” 85 percent of respondents active on the website expect their revenues to grow by an average of 26 percent in 2016.

Yelp, the online directory that lets people post reviews about local businesses, partnered with Wakefield Research to poll 901 American businesses in an online survey from Nov. 17-Dec. 3 and found that restaurants were most upbeat about next year, with 92 percent predicting an overall increase in revenue.

Meanwhile, young companies across a range of industries spanning food service and health to retail said they expect 48 percent growth in 2016.

“Small businesses are an important part of the economy. They provide roughly half of all private sector jobs and also provide direct benefits to the communities that get to enjoy their goods and services,” Michael Luca, a professor of business administration at Harvard University and Yelp’s so-called “economist in residence,” stated. “It’s interesting to peek into the minds of small business owners, to see how they’re feeling and what they’re thinking about. This group of businesses is clearly optimistic, which is consistent with relatively strong consumer sentiment and a recent uptick in retail sales.”

With that being said, unexpected challenges remain top of mind for most, but contrary to widespread media reports, healthcare and minimum wage aren’t the main concerns. The small businesses surveyed cited attracting and retaining customers (60 percent) as their number one issue, followed by limited marketing budgets (32 percent) and competition from larger businesses (30 percent).

“Small businesses worry about their own ability to grow, even as they remain optimistic,” Luca noted. “Healthcare and other concerns, while important, seem to be less of a problem for many small businesses as they prioritize growth.”

And they’re well aware that Yelp reviews can make or break their businesses.

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Respondents overwhelmingly felt that consumer feedback platforms offer the digital tools and confidence they need to attract new customers, with 91 percent opting to use digital marketing tools such as social media platforms (75 percent), consumer review platforms (48 percent) and search engine advertising (48 percent).

“It’s clear that the best local businesses value the feedback of their customers,” Jeremy Stoppelman, CEO of Yelp, said. “Consumers now have the power to effortlessly share their opinions and experiences, which is a game-changer, helping savvy small business owners quickly improve and grow.”

“There’s a misconception that only big companies have the capacity and resources to use sophisticated, high-tech marketing tools,” Luca continued, noting that things have changed dramatically since the days when billboards and Super Bowl ads seemed like the only way to reach people. “With an expanding set of tools to engage with customers, small businesses can leverage consumer feedback platforms to build higher-quality customer relationships.”