Tech & TalentIn this age of technology, small business is still personal

About CIT

CIT is a leading national bank focused on empowering businesses and personal savers with the financial agility to navigate their goals. CIT Group Inc. (NYSE: CIT) is a financial holding company with over a century of experience and operates a principal bank subsidiary, CIT Bank, N.A. (Member FDIC, Equal Housing Lender).

2Tech & Talent | About

About this survey

This CIT-sponsored survey of more than 300 leaders at U.S. small businesses in 2019, conducted by The Harris Poll, is designed to illuminate the intersection of technology and talent — two of today’s most important contributors to business success. The survey was inspired in part by CIT’s own experience in better serving customers by combining digital capabilities with deep expertise.

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Our survey findings point to four key takeaways:

3Tech & Talent | Key findings

IntroductionIn an increasingly competitive landscape, small businesses face bigger challenges to stay ahead of the curve, especially when it comes to technology and talent. Small business leaders responding to our inaugural survey on the intersection of technology and talent revealed that they’re at least somewhat optimistic about what the future holds and generally foresee investing at least as much in their businesses as they did last year.

Cautious optimism is the attitude most small business executives and owners have about the impact of technology over the next year.

However, technology is still top-of-mind for small business executives. They understand its value for growing their business.

So why be cautious?

• A need to see immediate results seems to be drivinginvestment priorities.

• Business is still very personal, with exceptionalcustomer service most frequently cited as a growth driver inthe past 12 months.

• Respondents may be reacting to perceivedeconomic uncertainty in the year ahead.

With optimizing cash flow and increasing working capital identified as important financial needs for the next 12 months, tech and talent investment choices seem to be di�cult to make for small business leaders. They may be underestimating the investment needed in both.

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Small business executives view technology with cautious optimism.

Only one-third of the respondents anticipate new or disruptive technologies will have a positive impact on their businesses over the next 12 months, with half (50%) reporting they expect no impact at all.

While most of the respondents — 91% — plan to invest in their businesses in the next 12 months, their focus will be on immediate needs. Satisfying demand by adding new inventory and promoting their businesses with investment in marketing and advertising are where the largest proportions of their investment, on average, will be allocated.

Investing in technology and software upgrades, which could be considered a longer-term strategic investment, came in fourth on their list of priorities, with equipment upgrades taking the third spot.

4Tech & Talent | Cautiousness towards technology

This cautious approach to technology investment may in part be due to old habits. Another study of 509 small businesses found that 91% have standard o�ce equipment and 58% of small businesses’ regular work requires employees to be physically present in an o�ce.1

1https://www.brother-usa.com/virdata/content/en-us/printers/brotherusahomepage/newsdocuments/smallbusinesssurvey_061416.pdf

MARKET INSIGHT

Figure 1Impact of disruptive or new technologies on business over next 12 months

Figure 2Average % investment*

*Among small business executives planning to invest over the next 12 months

Tech/software upgrades

15.7%Adding new

inventory

Sales

19.1%

13.4%

Marketing & advertising

Hiring new employees

18.0%

8.6%

Equipment upgrades

Training employees

17.4%

6.1%

6%Negative impact

33%Positive impact

More than two in five respondents note that investment in technology helped their business grow over the past 12 months.

Eight in 10 say technological investment:• is a business need, not just a competitive advantage (84%)• is critical to helping attract and retain customers (79%)

Those who plan on investing over the next 12 months recognize technology may help build rapport with their customers. Customer relationship management (CRM) systems (48%) trail just behind cloud computing systems (52%) as the most frequently cited priority areas for tech investments.

Cybersecurity and data privacy (47%) is also high up on the list, suggesting small business leaders recognize keeping customer data secure is an essential requirement both for reputation and strong customer relations.

60%O�ering exceptional customer service

48%O�ering new products

42%Investing in technology

30%Implementing innovative pricing strategies

27%Providing an online payment tool for customers

26%Hiring additional sta�

22%Increasing credit line or working capital

19%Improving supply chain

Figure 3Aspects aiding business growth over past 12 months

5Tech & Talent | Technology is top-of-mind

While our survey indicates small business executives have varied priorities, the results suggest technology is still top-of-mind.

MARKET INSIGHT

These technology investments may prove beneficial. A study from Deloitte found that the most digitally advanced small businesses, relative to the least digitally advanced, had revenue growth nearly 4 times as high over the previous year. Further, those digitally advanced businesses were more likely to “innovate through new product o�erings, have a more diversified customer base, and experience increased inquiries across the sales funnel.”2

2https://www2.deloitte.com/content/dam/Deloitte/us/Documents/technology-media -telecommunications/us-tmt-connected-small-businesses-Dec2017-old.pdf

Nearly 3 in 4 small business executives say having customers make real-time online payments is critical to the success of their business.

8% - My business has not grown in the past 12 months3% - None of the above

Figure 4I have to sacrifice in other areas in order to a�ord essential business equipment (% agree)

Several factors appear to be contributing to small business leaders’ investment priorities.

Respondents most frequently report that o¦ering exceptional customer service (60%) has helped their businesses grow in the past 12 months.

About half of survey respondents say that a¦ording essential business equipment requires making sacrifices in other areas — such as hiring new employees and funding marketing initiatives.

Economic uncertainty appears to be another contributing factor to holding back on longer-term and potentially expensive tech investments, as a quarter of respondents believe the economy could negatively impact their businesses in the year ahead.

Not all small business leaders are ready to make those di§cult investment choices.

6Tech & Talent | Investment priorities

“We believe at CIT that technology is only as e�ective as the employees who implement it and the customers who benefit from it. Our own successful integration of technology and talent has been instrumental in empowering both our clients and employees.”

- Denise MenellyExecutive Vice President & Head of Technologyand Operations for CIT

25%Negative impact

46%Positive impact

20%No impact

Figure 5Impact of the economy on business over next 12 months

9% - Not sure

strongly agree somewhat agree

51%agree

0% 100%50%

12% 39%

Small business leaders realize their workforce will play a major role in implementing new technology — both by addressing the risks that come with it and keeping customer service front-and-center.

While most respondents say their current workforce is tech-savvy enough to keep pace with digital transformation, more than two in three also believe businesses need to focus on hiring tech-savvy employees. However, those planning to invest in their businesses over the next 12 months are allocating the smallest proportion of their investment budget to training and hiring , 6.1% and 8.6% respectively. These results are interesting to note, since more than a quarter (26%) report hiring additional sta� aided their business growth in the past 12 months.

On the technology investment side, 74% indicate that having customers make real-time online payments is critical to the success of their businesses. However, just two in five planning to invest over the next 12 months (40%) say they will do so in innovative payment methods, with 11 percent not planning any tech investments at all.

The responses also indicate investing in technology is sometimes jeopardized by more immediate needs, which could result in sacrificing business growth.

Figure 6Attitudes towards talent (% agree)

7Tech & Talent | Investment trade-offs

Tech and talent investment choices seem to be especially di�cult as small businesses are focused on optimizing cash flow and increasing working capital.

82%

The current workforce at my business is tech-savvy enough to keep up with the

pace of digital transformation.

Businesses need to focus on hiring talent that are tech-savvy as relationship building becomes less important.

69%

About 3 in 4 small business executives

agree having customers make real-time online payments is critical

to the success of their business

Only 2 in 5 of those planning to invest in the next 12 months

say they will do so in innovative payment methods

0% 100%0%100%

BUT...

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Discover how we can help you power your business forward.Learn more at https://cit.com/business

8Tech & Talent | Choosing a financial partner

What comes next?There’s a solution to balancing these needs and your business’s day-to-day challenges: Finding the right financial partner.

Survey respondents most frequently report that the top tool provided by a lender that would make it easier to manage or grow their businesses is personalized customer service (43%), followed closely by online financing application tools (40%).

“We're committed to delivering the financial agility and expertise that small businesses need to thrive. For example, our technology-driven solutions o�er an excellent automated process that allows for a seamless financing experience. Credit decisions are delivered in as little as five minutes, with funding as quickly as the same day.”

- Ken MartinManaging Director of CIT's Small BusinessSolutions Unit

Working with a partner like CIT, you’ll have the resources to support not only your long-term growth but also the solutions you need for operations cash flow.

At CIT, we o�er:

Award-winning technology platforms, products designed for small business growth and payment solutions for B2B clients

A fast and flexible financing process to help your business receive loans and leases more quickly and easily than ever before

Over 111 years of experience in the financial industry to best meet your needs

• Age 25+

• Employed full-time, part-time or self-employed

• Maximum annual company revenue of $1 billion

• Has a title of director or higher

• Has sole or shared financial decision-making responsibilitiesat their company

Where necessary, responses were weighted according to the number of employees in their business to bring them in line with their actual proportions in the population.

About CIT

CIT is a leading national bank focused on empowering businesses and personal savers with the financial agility to navigate their goals. CIT Group Inc. (NYSE: CIT) is a financial holding company with over a century of experience and operates a principal bank subsidiary, CIT Bank, N.A. (Member FDIC, Equal Housing Lender). The company’s commercial banking segment includes commercial financing, community association banking, middle market banking, equipment and vendor financing, factoring, railcar financing, treasury and payment solutions, and capital markets and asset management. CIT’s consumer banking segment includes a national direct bank and regional branch network. Discover more at www.cit.com/about.

The Harris Poll is one of the longest running surveys in the U.S. tracking public opinion, motivations and social sentiment since 1963 that is now part of Harris Insights & Analytics, a global consulting and market research firm that delivers social intelligence for transformational times. We work with clients in three primary areas; building twenty-first-century corporate reputation, crafting brand strategy and performance tracking, and earning organic media through public relations research. Our mission is to provide insights and advisory to help leaders make the best decisions possible. To learn more, please visit www.harrisinsights.com.

About the Harris Poll

9Tech & Talent | More about this survey

MethodologyThis survey was conducted online within the United States by The Harris Poll on behalf of CIT from August 5 to August 16, 2019 among 306 executives at small businesses (defined as companies with 1-99 employees). Qualified respondents met the following criteria: