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Survey Says…How are Small Businesses doing?

By: Mark Kleinschmidt

We are swimming upstream as we look at all the data that tries to explain the performance and health of small businesses.  Numerous trustworthy surveys exist, each featuring their own methods and objectives aiming to accurately portray the small business environment. Which survey provides the most accurate view?

The Small Biz CEO has examined quite a few surveys and found the WSJ/Vistage Small Business CEO Confidence Index and the MetLife & US Chamber Small Business Index to offer the clearest view. Both surveys identified several persistent patterns worth noting. How does your business compare to the survey results?

First and foremost, both surveys identified inflation as the top concern.  The Met Life & US Chamber survey noted that this wat the eighth consecutive quarter that inflation was the number one concern.  Because of this, the WSJ/Vistage survey found that 55% of the businesses surveyed plan to raise prices in 2024.

Secondly, both surveys showed that business owners are losing confidence that the economic conditions are improving.  The Met Life & US Chamber Confidence Index fell 8 points from Q3 of 2023.

The third recurring theme centered around the challenge to hire new employees. The WSJ/Vistage Survey showed that only 44% of businesses were operating at full capacity.  Increased salary demands were also noted as a leading concern.

WSJ / Vistage Small Business CEO Confidence Index (January 5, 2024)

  • 20% of small business owners say the economy has improved compared to 12-months ago (up 7 points from November) and 44% say that the economy has gotten worse over the past year (3 points less than November).
  • 57% of small businesses plan on increasing employees in 2024 (up 9 points from November). 
  • Hiring challenges impact the ability of 44% of small businesses to operate at full capacity (up 5 points from November).
  • 33% of small businesses expect to increase fixed investments in 2024 (up 2 points from November) and 21% plan to seek capital in 2024.
  • Small business views on whether the U.S. is in a recession have softened over the last month.  18% of small business owners say that a soft landing has occurred (up 7 points from November), 20% are saying we are in a recession (unchanged from November), and 27% say the country is approaching a recession (down 12 points from November).
  • 62% of small businesses are bullish about expected revenues in the next 12 months (up 5 points from November).  49% believe profitability will improve (up 7 points from November) and 18% believe that profitability will shrink (1 point lower than November).
  • 55% of small businesses expect to raise prices in 2024 (15 points lower than November) and 40% expect their prices to remain the same (15 points higher than November).

 

MetLife & U.S. Chamber Small Business Index for Q4 (December 12, 2023)

  • Index dropped 8 points from Q3 to a level of 61.3, returning to levels of confidence from earlier this year and consistent with Q4 in 2022.
  • A higher percentage of small businesses are negative about the U.S. economy (53%) (10 point increase from last quarter) and 25% are positive about economy’s overall health (8 point decrease).
  • This is the eighth consecutive quarter where inflation ranks as small businesses’ top concern (50%) and the second biggest concern is revenue (22%).
  • 42% of small businesses plan on increasing investment over the next 12-months (unchanged from the last 2 quarters) and 40% of small businesses plan on adding staff (unchanged from last quarter). The percentage of small businesses anticipating increased revenues remains elevated (65%) albeit 6 points lower than the last 2 quarters’ record highs.
  • 64% of small businesses believe the health of their own businesses is good (2 point decrease from last quarter) and 67% are comfortable with their current cash flow (5 point decrease, but consistent with Q4 of 2022).
  • 45% of small employers searched for new talent in 2023 and 60% of those employers said it was hard to keep up with salary expectations.
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