Impeachment. Trade wars. The 2020 election. Tariffs. With all the uncertainty around these and other issues, small business owners remain optimistic about the future. Yet despite the optimism, almost 30% expect a recession in the near future, and nearly 7-out-of-10 small business owners feel that the presidential candidate are not focused on small-business issues. To be fair, with all the noise and constant constitutional crises, there not a lot of oxygen left in the room. That being said, it is still a time that more are planning for growth than a recession.
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Small Business Resiliency is Hitting Hard
According to the quarterly Wells Fargo/Gallup Small Business Index survey, small business owner optimism continues to climb even in these uncertain times. It’s somewhat uncanny. This index measure both present and future optimism, and both were up.
The index is a composite of factors currently affecting the business climate. Surprisingly, these rises come from modest gain across a wide range of factors, not just one or two. In fact, when asked about their personal outlook, almost 8 in 10 small business owners were more optimistic than pessimistic. This has held relatively steady across the year, apart from a second quarter dip to 70%.
Small business owner’s confidence remains strong, even though their confidence in the economy has shown some signs of weakness. 63% said the economy was excellent or good, which is stable in comparison with Q2 and down 7% from Q1. A climate like this is often associated with growth and business stability.
But is this optimism going to last?
Although small business owners remain very optimistic, their confidence in the overall economy has shown some signs of erosion. Sixty-three percent say the current state of the U.S. economy is excellent or good. While still strong, this is down somewhat from 70% in July’s Quarter 3 poll but on par with Quarter 2, when 63% rated the economy as excellent or good.
Notably, 1/3 of small businesses expect an economic downturn in the next 12 months. Roughly a third think a recession is somewhat likely, and about 27% say it’s not very likely. Owners generally say their business are tied to the economy as a whole, with 84% saying it affects them somewhat to a great deal.
Contrary to what we’ve reported from other sources, 3 out 4 small business owners feel they have the right strategy in place to handle a downturn, and nearly 90% feel that they are at least somewhat prepared to handle a downturn that might occur in the next few years.
Are We Seeing Complacency?
While this data is all extremely encouraging for a business like ours who serve other businesses. However, there are so many risk factors that are unknowable. With so much uncertainty about the future of the country, it can be hard to accept that 75% of small business owners truly have the right strategy and protections.
We’ve talked before about how the trade war is volatile, and it influences the economy. Plus, a weakened Trump is apt to do something rash and drastic, and who knows what his social media will result in for the market or politics. Even global tensions like Brexit can be a risk for supply chain disruptions. We don’t want to sound too alarmist, but the list is a long one. How could you prepare when no one knows with any degree of certainty when or if another shoe is going to drop. That’s why I find this statistic the most concerning of all.
2020 Election & Small Business Desires
There isn’t any real consensus among small business owners when it comes to politics. Taxes/tax relief always tops the list, but it is fairly low, with only 1 in 5 business owners reporting it. It’s not surprising, as a number of small businesses did not see the amount of tax relief the big businesses did from the 2018 Tax Cut and Jobs Act. Aside from healthcare, which was at 11%, all the other political areas were under 10% for small business owner fears. Based on this information, there doesn’t seem to be any real hot-button issues rising to the top. Maybe this is due to a sense of complacency, or perhaps we all have different issue depending on our local environments.
An Optimism Killer for Small Business Owners? Finding New Business
Finding new business remains the top challenge for small business owners. This has remained relative flat for the year. Competition from larger companies and tight labor markets were the next two major concerns. They also remained relatively stable over the year.
While owners remain upbeat about their future, one can’t help to wonder if some complacency has started to set it. Small business owners share some concern about a recession longer-term, and most feel like they have the right places in place to manage it. With all the uncertainty swirling around, I find the difficult to believe, but I hope I am wrong.
At ProStrategix, we know you have concerns. We’re designed to help give you the business support you need so you can focus on doing what you love. If you would like to learn about how we might be able to help you, please contact us.