Despite a Changing Economy and Recession Concerns, Small Business Owners Remain Confident About Their Financial Position
"Small business owners remain cautiously optimistic," said
Following are key themes uncovered by the Spring 2019 Small Business Growth Index:
Small business owners think stock market volatility will impact their business, but many have yet to feel the effect.
- Many SBOs are preparing for the impact of future stock market volatility: 49 percent are or will be more conservative when it comes to inventory or supply management, 36 percent say it has or might decrease their sales, and 34 percent say it has or might impact their ability to expand and grow their business. Additionally, 27 percent say they are not or may not be able to hire new employees.
- However, the fluctuations in the stock market have not changed the outlook of 66 percent of business owners. Additionally, 40 percent of SBOs report an increase in sales over the past six months.
- Since last fall, optimism has dropped eight percentage points, with 59 percent of SBOs saying business conditions are good or excellent, down from 67 percent in
The economy and a tight labor market are impacting small businesses' ability to hire, while those who plan to hire are competing for talent with their pocketbooks.
- Twenty-nine percent of SBOs plan to hire in the next 6 months, down from 33 percent in Fall 2018. Sixty-six percent of these new hires will be full-time employees.
- Of SBOs who do not plan to hire, 29 percent say they would like to but are nervous to take on the added expense due to economic conditions, while 28 percent say they cannot find the right talent, and 24 percent say they don't have the financial resources to do so.
- The majority of SBOs are competing for talent with their pocketbooks, with 76 percent of those who plan on hiring in the next 6 months noting they are providing industry leading or competitive salaries. Forty-seven percent say they are providing more benefits to employees and 43 percent say they are marketing their business as a great place to work. Only 35 percent say they are investing in differentiated or modern office perks, and 29 percent say they are providing an option for flexible work environments.
- A third (34 percent) of business owners have leveraged the gig economy for their business, and 19 percent say that it has helped them get work done in a tight labor market.
Half of the respondents feel the tax plan has been generally positive for small businesses, yet many feel they will actually pay more in taxes.
- Half (51 percent) of SBOs say the tax plan has been positive for small business. Male business owners are more likely to say the plan has been positive for small business (57 percent), compared to 41 percent of female business owners who say it has been helpful.
- Twenty-one percent of SBOs expect to pay more in taxes this year, up from 19 percent who expected to pay more in Fall 2018 and 11 percent one year ago. Fifty-three percent of business owners think they will pay about the same.
Business owners are split on how they'll be impacted by artificial intelligence and machine learning
- More than half (53 percent) of SBOs with
$1 to $10 millionin revenue believe artificial intelligence (AI) and machine learning is already impacting or will impact their industry. Additionally, 48 percent of SBOs with $1 to $10 millionin revenue are concerned about their ability to hire the right tech talent to help advance their business into the future.
- However, most business owners with
$1 to $10 millionin revenue do not think that some of their employees' roles will be replaced by AI and Machine Learning-based technologies. Only 8 percent feel that some of their employees' roles will be replaced in the next five years, and 19 percent feel that some of the roles will be replaced in ten years.
- Only a quarter (23 percent) of all SBOs feel pressure to change aspects of their business, like customer experience, based on industry innovation driven by large companies like
"Change is a constant for small business owners, and it's encouraging to see leaders remain resilient as they interpret new things like tax reform and the impact of technology," said
Engine also interviewed a national sample of 200 for-profit small businesses in the U.S. These small businesses are defined as those with a total annual revenue of
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