Small and medium-sized business owners are growing increasingly concerned about the economic conditions in the United States, according to a recent survey by Nationwide. Two-thirds of business owners expect a recession within the next six months, with over 70% of those predicting a recession that will be comparable to or even worse than the Great Recession of 2007-2009. Furthermore, 63% of small business owners and 49% of midmarket owners view cutting costs as a top priority as they attempt to weather ongoing inflation and rising interest rates.
Despite these concerns, the survey found that business owners remain optimistic about their own operations. While only 19% of small business owners and 39% of midmarket owners rate current business conditions positively, 74% of midmarket owners and 55% of small business owners rate their own business conditions as good or excellent. As a result, many business owners are reversing some of the cost-cutting measures they took during the pandemic. For instance, 21% of small business owners and 42% of midmarket owners have hired new workers, and both groups have reduced the number of layoffs.
Inflation and interest rates remain the most significant challenges facing business owners. Nearly three-quarters of small and medium-sized business owners cite inflation as their biggest issue, while 62% of midsize business owners and 50% of small business owners view rising interest rates as an ongoing challenge.
Nationwide’s survey highlighted several persistent economic factors of concern to business owners, including bank failures and uncertainty about interest rates. Approximately 71% of small business owners and 80% of midmarket owners are worried about the health of the US banking system in the wake of recent failures, and nearly 30% of business owners have changed commercial banks. Forty-six percent of small business owners and 40% of midmarket owners believe the Federal Reserve should decrease interest rates to aid the economy, while 13% and 23%, respectively, believe the Fed should take a more aggressive stance on raising rates.
To navigate these challenges, Nationwide recommends that business owners partner with financial advisors and other risk management partners to prepare for unexpected events and protect their businesses long-term. Despite economic uncertainty, there remain opportunities for businesses to grow and thrive. By managing costs strategically while continuing to adapt to evolving market conditions, businesses can position themselves for success in the current economic climate.
Additional Piece:
One of the most significant challenges facing small and medium-sized businesses in the United States in the current economic climate is rising inflation and interest rates. These factors impact businesses of all sizes, but they are particularly acute for small and medium-sized businesses that may lack the resources and financial flexibility of larger organizations. As a result, business owners must look for opportunities to minimize risk and reduce costs while continuing to meet customer demand.
One approach that has proved effective for many businesses is to adopt innovative technologies and digital tools that can enhance operational efficiency and improve customer service. For example, tools like digital payments and point-of-sale systems allow businesses to reduce cash handling and streamline transactions, while customer relationship management (CRM) platforms can help businesses better understand their customers and create more personalized marketing campaigns.
Another key strategy for businesses navigating economic uncertainty is to prioritize risk management. This means adopting a proactive approach to identifying and managing risks, such as potential supply chain disruptions, cyber attacks or accidents. Business owners can partner with risk management professionals to develop a comprehensive plan for protecting their operations and minimizing the impact of unforeseen events.
In conclusion, the current economic climate in the United States presents significant challenges for small and medium-sized businesses. However, by adopting innovative technologies and digital tools, prioritizing risk management, and managing costs strategically, businesses can position themselves for success in a highly competitive and dynamic marketplace. While economic uncertainty may persist for the foreseeable future, there remain opportunities for businesses to thrive by leveraging their strengths and adapting to changing conditions.
Summary:
Small and medium-sized business owners are growing increasingly concerned about economic conditions in the United States, with two-thirds of business owners expecting a recession in the next six months, according to a recent survey by Nationwide. Rising inflation and interest rates are the most significant challenges facing business owners, with nearly three-quarters of small and medium-sized business owners citing inflation as their biggest challenge. Bank failures and uncertainty about interest rates persist as key concerns, with 71% of small business owners and 80% of midmarket owners worried about the health of US banks. Despite these concerns, many business owners remain optimistic about their operations, and some are reversing cost-cutting measures they adopted during the pandemic. To navigate ongoing uncertainty, business owners can adopt innovative technologies, prioritize risk management, and manage costs strategically.
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Business owners’ concerns about the US economy have risen significantly since fall 2022, according to a new Nationwide survey
Columbus, Ohio, June 6, 2023 /PRNewswire/ — Small and medium business owners, like most American consumersare increasingly concerned about economic conditions in the US, with two-thirds of them expecting a recession in the next six months, according to new data from Nationwide. Of those who expect a recession, more than 70% say it will be similar to or even worse than the Great Recession of 2007-2009.
Just 19% of small business owners and 39% of midmarket business owners rate business conditions in the US economy positively, down 8 points and 19 points, respectively, since September 2022.
Inflation, interest rates are the most important thing
Persistent inflation and rising interest rates continue to affect their businesses, with nearly three-quarters of small and medium-sized business owners citing inflation as their biggest challenge, an 11-point increase from September 2022.
- Rising interest rates follow with 62% of midsize business owners and 50% of small business owners saying it’s an ongoing challenge (up 4 points and 15 points, respectively, from fall 2022).
Despite their bleak view of the economy, most business owners (small 55%; midsize 74%) are surprisingly optimistic about their own business operations.
- 74% of midsize business owners and 55% of small businesses rate their business conditions as good or excellent.
Returning to pre-pandemic practices
Business owners are even reversing some actions taken during the course of the pandemic, including:
Hire more, fire less:
- 21% of small business owners say they have hired more workers, up 8 points from the drop.
- Only 6% of small businesses have laid off employees, a 4-point drop from the fall.
- 42% of mid-market owners have hired new workers, a jump of 18 points.
- 18% of medium-sized companies made layoffs in the last 6 months, 5 points less than in the fall.
Managing Supply Chain Disruptions:
- 21% of small businesses say supply chain disruptions are among their biggest challenges, an 8-point drop from the fall.
- 31% of midsize companies list supply chain disruptions as one of their biggest challenges, according to their responses from the fall.
Stay open longer:
- Only 10% of small business owners have reduced hours of operation, 7 points less than in the fall.
- 14% of mid-market owners have reduced operating hours, an 11-point decrease.
These positive indicators demonstrate that business owners can find their footing in some areas as they continue to navigate the effects of inflation and rising interest rates.
- Cutting costs remains a top priority for business owners (63% small businesses; 49% midmarket) as they hedge where they can to minimize risk.
“Business owners are taking a close look at the current economic uncertainty, but are also confident in their operations as they manage conditions to better meet demand and remain competitive,” he says. russ johnston, President of Business Insurance at Nationwide. “As business owners navigate the tight job market to add staff, return to traditional work hours, and explore cost-saving strategies, it is imperative that they review risk and ensure the business does not compromise on protection long-term”.
Persistent Economic Factors: Bank Failures and Continued Interest Rate Pressures
As business owners look to the future, they must also be diligent with their financial planning, especially as concerns about the health of the banking system and uncertainty about interest rates persist.
- Most business owners, small (71%) and medium (80%), are concerned about the health of US banking institutions following the recent bank failures. Nearly 3 in 10 business owners have reassessed where their commercial banks are.
- Four in 10 small (46%) and midsize (40%) businesses feel the Federal Reserve should cut interest rates to ease pressure on the economy, while 13% and 23%, respectively, think the Federal Reserve should be more aggressive in raising rates.
These unknowns mean that businesses could be hit once again by rising interest rates and be forced to halt hiring or lay off workers, reversing the progress they have made since exiting the COVID economy.
“Business owners are understandably focused on overcoming the current recessionary and inflationary environment. However, the past few years have taught us how crucial it is to protect against risk and prepare for unforeseen threats,” he said. joseph perez, president of the Nationwide Corporate Solutions organization. “Business owners have enough in their plans today, so we encourage them to partner with financial advisors and other risk management partners who can help them navigate the current uncertainty and be prepared to take advantage of opportunities to grow their business when the recessionary environment will eventually pass.”
More findings from Nationwide’s 2023 Economic Impact Survey can be found here.
Survey Methodology:
Nationwide commissioned Edelman Data & Intelligence to conduct a 15-minute online quantitative survey among a national sample of 400 small business owners and 400 US mid-market business owners. between March 30 and April 28, 2023. As an accredited member of The Insights Association and ESOMAR, Edelman Data and Intelligence conducts all research in accordance with local, national and international laws, as well as all market research standards and guidelines.
About the whole country
Nationwide, a Fortune 100 company headquartered in Columbus, Ohiois one of the largest and strongest diversified financial services and insurance organizations in the United States. Nationwide is rated A+ by both AM Best and Standard & Poor’s. As an industry leader in driving customer-focused innovation, Nationwide offers a full range of insurance products and financial services, including auto, commercial, home, agricultural and life insurance; private and public sector retirement plans, annuities, mutual funds and EFTs; franchise and surplus, specialty and bond; and insurance for pets, motorcycles and boats. For more information visit www.nacional.com. Follow the firm at Facebook and Twitter.
Nationwide, Nationwide is on your side and Nationwide N and Eagle are service marks of Nationwide Mutual Insurance Company. © 2023
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SOURCE Nationwide
https://www.prnewswire.com/news-releases/survey-businesses-bracing-for-recession-while-reversing-pandemic-cuts-301843653.html
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