Inflation, continuing a healthy stream of revenue, and the highest-in-a-generation interest rates are still the top concerns for small business owners, according to the latest Small Business Index (SBI). The quarterly report is conducted by MetLife and the US Chamber of Commerce.
Of the challenges cited, inflation remains the biggest impediment for all quarters in 2022 and 2023, although the SBI notes that it may be holding steady as it hasn’t increased. However, the survey was conducted in October 2023, right before gas prices began falling steadily through today (according to AAA, regular unleaded has fallen more than 50 cents per gallon during that time). Year-over-year inflation rates have also fallen to 3.1 percent as of November 2023, although we don’t need to tell you that many prices remain stubbornly high.
Adding to this is the decrease in small business optimism. Just 25 percent of the small businesses surveyed said that the overall US economy is healthy, while only 30 percent said their economy locally is looking good. This is driven primarily due to the continued lack of qualified staff and keeping up with employee-related costs like salaries and benefits. This could be a challenge for 2024 as the US enters an election year and the Biden administration looks to capitalize on economic improvements since 2021.
While the latest SBI individually doesn’t appear to be great news, not all is bad when compared to the past two years in total. In fact, like the inflation concerns, challenges from years past such as supply chain limitations have been dropping. Additionally, most small businesses rate the overall health of their own company as “somewhat good” and have since Q1 2021 (the last time the majority of businesses said it was “very good” was in Q4 2019). More than 90 percent plan to invest more or at least the same as they did last year in their business, while 40 percent plan to add more staff in the coming year.
The entire report is available here.
[12.19.23]