Written by Riva Lesonsky
Most small businesses surveyed expect their profits to be higher in 2024 than last year.
Happy days are here again for small business owners. Well, in a way. There's a lot of good news (along with some challenges) in several reports and surveys targeting small business owners in the country.
Economic outlook for small and medium enterprises
According to the just-released 2024 Bank of America Business Owner Report, 65% of small business owners expect their revenue to increase this year, and 55% expect their revenue to be higher in 2023 than in 2022. This is a positive trajectory.
Over the next 12 months, small business owners also plan to expand their operations (39%) and hire more employees (30%). Although these numbers are positive, they are slightly down from last spring's Small Business Owners Report (SBOR).
While small business owners surveyed are bullish about their companies, they are somewhat cautious about the domestic economy, with only 33% expecting the economy to improve over the next 12 months. (Strangely, this is much lower than his 75% of small business owners who believe the national economy will improve next year.) Also, fewer small business owners believe the local economy will improve next year. Only 42% of him.
economic concerns
Small business owners are still worried about inflation and rising interest rates, but less so than they were a year ago. This year's top concerns are the presidential election (78% worried) and the political environment (75%). Additionally, 61% of small business owners say the presidential election will impact their business, requiring them to increase sales (31%), increase business costs (29%), and raise prices (28%). I expect it to be.
Other biggest concerns:
- Inflation—73%
- Medical expenses – 69%
- Interest rate—63%
- Product price—61%
- Recession—56%
- USD Strength—53%
- Corporate tax rate—52%
- US/World Stock Market – 50%
Issues such as labor shortages, employment challenges, supply chain crises, and credit availability are no longer as worrying as they once were.
inflation
As mentioned above, inflation remains a concern for small businesses, with 84% saying it is currently impacting their business. Due to inflation, small and medium-sized enterprises find themselves in the following situations:
- Price increase — 68%
- Reassess cash flow and expenses — 40%
- Increase in employee wages – 30%
- Sales loss – 29%
- Reduced business costs – 27%
funding
71% of small businesses plan to raise capital this year, down from 82% in last spring's report. Just 16% of people plan to apply for a bank loan or line of credit this year, down from 24% last spring.
credit card
Another Bank of America Research Institute report, Small Business Checkpoint, shows that small businesses are increasingly relying on credit cards, with balances increasing 18% since 2019. While an increase in balances is usually a concern, the institute points out that it is adjusted for inflation. Credit card balances are at or below 2019 levels. ”
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Management and growth of small and medium-sized enterprises
Driving customer engagement
How do small business owners attract customers? Prioritize delivering unique customer experiences and humanizing your business through personalized interactions, requesting feedback, and building brand awareness. Additionally, 65% use social media to engage with customers and promote their business.
Most small businesses (82%) have customer engagement strategies in place (77% say they are successful) that:
- Personalized customer interactions — 80%
- Implementing customer feedback – 48%
- Direct marketing (direct mail and email newsletters) – 38%
- Frequent sales and discounts – 27%
- Hosting a community event – 24%
- Loyalty Awards/Programs – 23%
Gathering customer feedback is important to 79% of small business owners. How do they get feedback?
- Monitor online review platforms – 48%
- Organize feedback in your email inbox – 41%
- Ask for feedback directly in store – 40%
- Send an email customer service survey after purchase – 30%
digitalization
In the past 12 months, 71% of small business owners have digitally optimized their business. Actions performed include:
- Do your business banking online/mobile app – 51%
- Accept more forms of cashless payments – 45%
- Increased/expanded social media presence – 37%
- Implement more digital-first marketing strategies – 27%
- Added cybersecurity measures – 21%
- Use a cloud-based platform – 19%
Introduction of AI
37% of small business owners plan to implement AI to differentiate themselves from competitors (47%), streamline payroll and bookkeeping (36%), and assist with recruiting (25%) I'm going to use . .
sustainability
According to the report, “More small business owners are implementing sustainable business practices than last spring, but they are encountering a variety of obstacles in incorporating sustainability into their operations.” , 81% have adopted sustainable business practices and 71% say they are committed to sustainability.
The most common sustainable practices:
- Minimize paper use – 68%
- Establishing greener habits (recycling) – 57%
- Providing a hybrid working environment (reducing transportation costs)—30%
- Working with sustainable vendors/suppliers – 25%
However, implementing sustainable business practices poses challenges for 69% of companies:
- Cost increase – 44%
- Customer dissatisfaction with high prices – 20%
- Customer apathy towards sustainability initiatives – 18%
make personal sacrifices to maintain profitability
Most executives surveyed say their companies are profitable, but they have made personal and professional sacrifices to get there. In fact, 70% say they have “made trade-offs” to maintain profitability.
Trade-offs include increasing prices (47%), increasing work hours (45%), reducing one's own salary (32%), and reducing marketing costs (24%).
Larger companies are more optimistic
This year, Bank of America combined its annual Small Business Owners Report with insights from midsize companies to create a comprehensive report that explores the perspectives, aspirations, and future prospects of business owners across the country. Interestingly, a mid-sized company said: Business owners are even more optimistic than small business owners. 87% believe revenues will increase, 80% plan to expand this year and 69% plan to hire. Additionally, 93% of midsize businesses surveyed plan to raise capital this year. .
But in general, both small and medium-sized business owners expect this to be a good year. I asked Sharon Miller, president and co-head of business banking at Bank of America, whether she thought there was anything wrong with the report for small business owners. “Although inflation rates have slowed in recent months, small business owners still recognize inflation as their biggest concern,” Miller said.
Those concerns appear to have been allayed by Miller's surprise about the report. she says: “What struck me most was the overall decline in many of the key concerns for small business owners this year. More specifically, concerns about a potential economic recession (in the spring of 2023) (down from 72% to 56%) and the impact of supply chain issues (down from 57% to 41% in spring 2023) both showed notable percentage point declines year-on-year. indicates that business owners are confident in their business and earnings expectations and continue to plan and invest for the future.”
For more insights from small business owners across the country, read the full 2024 Bank of America Owners Report.
About the author
Rieva Lesonsky is CEO of GrowBiz Media. SmallBusinessCurrents.com I've been covering small business and entrepreneurship for more than 30 years.Sign up with her to get more insight into her business trends free ocean current Newsletter.
