Several surveys are finding that most small business owners (SBOs) across the country are feeling more hopeful about the economy and their long-term health in the coming year, despite inflation remaining a top issue.
The Small Business Index (SBI), which is conducted quarterly by MetLife and the US Chamber of Commerce, found that SBOs were more confident than they were last quarter about the future (Q1 SBI score of 60.0 verses SBI score of 63.1 in Q2). The SBI score has yet to return to pre-pandemic levels; the SBI score in Q4 2019 was 71.7 with subsequent quarters clocking in a low of 39.5 in Q1 2020 to a high of 66.8 in Q2 2022. Nearly two-thirds report that they are comfortable with their current cash flow, which has remained steady since Q3 2022. Further, 71 percent expect that their revenue will increase in 2024, which is the highest recorded of the SBI since its inception in 2017.
Of the challenges cited, inflation remains the biggest impediment for the sixth straight quarter. Access to capital and rising interest rates are also on the list, with as much as 50 percent of SBOs saying that rising rates have put a damper on their plans to grow. Lending institutions have also become stricter with terms, and 91 percent agree that small businesses are the most vulnerable to rising interest rates.
Similarly, TD Bank’s most recent Small Business Survey found that SBOs cited inflation as their primary concern followed by employee retention and management (24 percent), product shortages (21 percent), and keeping up with the competition (20 percent). But positively, eight in 10 said that they feel optimistic about their business’ performance in the coming year, with 20 percent feeling concern about their survival—primarily driven by interest rates.
According to the survey’s summary, SBOs are taking several actions to ensure their health in the coming months including “setting their sights on reinforcing the financial strength of their business, beating out the competition, and tackling talent retention … which will be key to achieving long-term business goals amid challenging economic conditions.”
The full survey results can be found here and here.
[07.11.23]