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BofA Survey: 76% of Small Businesses Feel Well-Equipped to Survive a Recession

April 28, 2023, 07:22 AM
Filed Under: Economy

The majority of U.S. small business owners (72 percent) are concerned about the impact of a potential recession, however, 76 percent are confident their business could withstand the downturn, according to the Bank of America 2023 Small Business Owner Report (PDF). The survey of more than 1,000 business owners across the country found that, despite the continued impact of inflation and supply chain issues, 65 percent of business owners anticipate revenue growth in the next 12 months.

Small business owners were also asked about topics including future plans, sustainability, employee retention and labor. Conducted in March and April, other findings include:

  • 79 percent of business owners raised prices over the last 12 months.
  • 53 percent added benefits and perks to retain talent.
  • 49 percent plan to use automation and artificial intelligence (AI) tools for their business in 2023.
  • 34 percent believe the national economy will improve in the next 12 months.

“While the dual pressures of inflation and supply chain disruptions continue to incumber operations, small business owners remain bullish about their prospects for the year ahead,” said Sharon Miller, President of Small Business and Head of Specialty Banking and Lending at Bank of America. “Small businesses are poised for growth, implementing strategies to retain and attract talent and exploring new tools including artificial intelligence to gain an edge in a highly competitive market.”

Economic Concerns and Business Outlook

Inflation (79 percent) and a potential recession (72 percent) top business owners’ concerns over the next 12 months. These entrepreneurs also expressed anxiety around commodities prices (68 percent), the U.S. political environment (68 percent), rising interest rates (67 percent) and supply chain (57 percent).

Despite these concerns, the bottom line remains strong for many entrepreneurs. Fifty-six percent of business owners reported increased revenue in 2022 compared to 2021, and looking ahead at the next 12 months, 48 percent plan to expand their business (vs. 37 percent last spring). Additionally, 82 percent intend to obtain financing in the year ahead (vs. 70 percent last spring).
Retention Efforts and Hiring Plans

Struggling with labor shortages and a competitive job market, business owners are increasingly focused on employee retention. Over the past 12 months, 53 percent have added additional benefits and perks to existing compensation packages, including remote/hybrid work (34 percent), cost-of-living bonuses (34 percent) and more vacation time (33 percent). And 75 percent of these business owners said their efforts meaningfully impacted employee morale and retention.

Additionally, 34 percent of business owners plan to hire in 2023, up from 26 percent last spring. Over the past 12 months, 51 percent implemented additional perks and benefits to attract new talent, such as increased base pay for new employees (54 percent), remote/hybrid work (30 percent), new employee training or resource groups (27 percent) and additional healthcare benefits (27 percent).

Entrepreneurs Embrace Sustainability Despite Obstacles

Three-in-four SBOs have already implemented sustainable business practices, such as reducing paper usage, establishing environmentally friendly habits in their work environment and working with sustainable vendors. While implementation challenges exist—82 percent of entrepreneurs cited challenges such as increased costs (49 percent), limited supplier options (29 percent) and variable quality of sustainable products/services (26 percent) as primary obstacles—78 percent of business owners plan to implement sustainable practices over the next 12 months.

Continued Digitization of Business Operations

In the past year, 80 percent of small business owners adopted digital tools for their business, leveraging digital banking to manage their finances and social media to reach their customers. Business owners are also embracing AI and automation, with 49 percent planning to use AI tools to enhance their business in 2023.

Looking ahead, 55 percent of entrepreneurs anticipate accepting exclusively digital payments at some point in the future, and 90 percent say digital tools help make their operations more efficient, helping them save time and stay organized.

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