Small business owners have reason to be cautiously optimistic about the economic outlook for the coming year. The 2024 Bank of America Business Owner Report indicates that 65% of small business owners expect their revenues to grow, with 55% reporting an increase in profits from 2022. Despite this positive trajectory, concerns about the national economy persist, with only 33% of small business owners expecting an improvement in the next 12 months.
Inflation and higher interest rates remain top concerns for small business owners, but worries have decreased compared to a year ago. The upcoming presidential election and the overall political environment are seen as the biggest concerns this year, with 61% of small business owners expecting the election to impact their businesses in various ways. Other concerns include healthcare costs, commodities prices, and the strength of the U.S. dollar.
Labor shortages, supply chain challenges, and credit availability are less worrisome for small business owners currently. In response to inflation, many businesses have raised prices, reevaluated spending, and increased employee wages. However, fewer businesses plan to seek funding this year, with only 16% planning to apply for a bank loan or credit line.
Small businesses are relying more on credit cards, with balances up 18% since 2019. Despite concerns about rising balances, the Bank of America Institute notes that, adjusted for inflation, credit card balances are comparable to or lower than 2019 levels. The use of credit cards is just one of the ways small business owners are adapting to changing economic conditions.
Small business owners are prioritizing customer engagement to attract and retain customers. Personalized interactions, customer feedback, and social media interactions are key strategies being used by small businesses. Additionally, many businesses have implemented sustainable practices to align with consumer preferences and reduce their environmental impact.
Overall, small and mid-sized business owners are anticipating a good year, with a majority expecting revenue growth, expansion, and hiring increases. While concerns about inflation and the political environment persist, there is a sense of confidence among businesses as they plan for the future. Businesses are making personal and professional sacrifices to maintain profitability, showing their determination to succeed in the face of economic challenges.
