Inflation Identified as Top Concern for Small Businesses, According to TD Bank Survey

Small businesses across the United States are increasingly concerned about the impact of inflation on their operations, according to the results of the 2023 Small Business Survey released by TD Bank. The survey, which collected information from over 500 small business owners with annual revenues between $250,000 and $5 million, identified inflation as one of the top challenges facing small businesses.

The Impact of Inflation on Small Businesses

62% of the small business owners surveyed listed inflation as one of their key concerns. Rising interest rates and inflation have led to an increase in the cost of doing business, forcing small businesses to spend more to stay competitive. This has made it harder for businesses to grow profits and revenue as consumers rethink their spending habits.

Chris Giamo, Director of Commercial Banking at TD Bank, stated that financial institutions play a vital role in helping businesses access the capital they need to protect their businesses and maintain customer loyalty during challenging times.

Other Top Concerns for Small Businesses

In addition to inflation, the survey revealed other top areas of concern for small business owners:

• Employee retention and management (24%): Due to the tight job market, small businesses are finding it challenging to retain their employees. This has become a priority for many business owners.
• Shortage of products (21%): The shortage of products has become a significant concern for small businesses, affecting their ability to meet customer demand.
• Keeping up with the competition (20%): Small businesses are also worried about staying competitive in their respective industries.

Optimism Despite Challenges

Despite the current economic challenges, the majority of small business owners (80%) reported feeling optimistic about the success of their businesses in the next year. They continue to have faith in their ability to adapt to changing market conditions and provide quality products and services to their customers.

Resilience remains a necessary characteristic for small business owners as they navigate uncertainty and adapt their business models to meet customer expectations.

Small Business Priorities

To achieve long-term business goals and overcome the challenges posed by inflation and economic conditions, small business owners are prioritizing the following:

Survival:

Nearly 17% of small business owners identified survival as their top priority for the second half of 2023. Many plan to apply for loans or lines of credit to make critical investments that differentiate them from the competition.

Customer Focus:

While 20% of small business owners express concern about keeping up with the competition, the majority (35%) prioritize attracting and retaining customers rather than focusing solely on the competition.

Talent Retention:

Despite economic concerns, 70% of small business owners prioritize retaining their employees. Only a small percentage (4%) consider reducing their workforce a priority, while 26% plan to hire more employees.

Conclusion

The TD Bank Small Business Survey highlights the significant impact of inflation on small businesses across the United States. Business owners are grappling with rising costs and the need to stay competitive in a changing economic landscape. However, they remain optimistic about their ability to adapt and thrive.

Financial institutions, like TD Bank, play a crucial role in supporting small business owners by providing access to capital and expertise. Prioritizing customer retention, talent management, and strategic investments can help small businesses weather the challenges posed by inflation and succeed in the long term.

Summary

The 2023 Small Business Survey conducted by TD Bank revealed that small business owners are primarily concerned about the impact of inflation on their businesses. Rising interest rates and inflation have increased the cost of doing business, forcing small businesses to spend more to stay competitive. Employee retention, product shortages, and competition were also identified as significant challenges. Despite these obstacles, the majority of small business owners expressed optimism about the future success of their businesses. To overcome these challenges, small businesses are prioritizing survival, customer focus, and talent retention. Financial institutions, such as TD Bank, play a vital role in supporting small business owners by providing access to capital and expertise. By prioritizing customer relationships, strategic investments, and talent management, small businesses can navigate the challenges posed by inflation and thrive in the long term.

Cherry Hill, New Jersey – June 20, 2023 – Inflation was identified as one of the top business concerns affecting small businesses, according to the results of the 2023 Small Business Survey, released today by TD Bank, America’s Most Convenient Bank^®. The survey collected information from more than 500 small business owners (SBOs), with annual revenues between $250,000 and $5 million, on challenges, priorities and trends heading into the second half of 2023.

In addition to the 62% of business owners who listed inflation as one of their top business concerns, other top areas of concern were:

• Employee retention and management (24%)
• Shortage of products (21%)
• Keeping up with the competition (20%)

“In response to rising interest rates and inflation raising the cost of doing business, small business owners have had to increase spending to stay competitive,” said Chris Giamo, Director of Commercial Banking at TD Bank. “That, along with consumers rethinking spending habits, means inflation is making it harder for businesses on multiple fronts to grow profits and revenue. As a bank, we’ve seen firsthand the important role financial institutions play in helping business owners to access the capital they need to protect their business and maintain customer loyalty in difficult times.”

a hopeful future

Even with the volatile macroeconomic environment, the tight job market, and the threat of a recession affecting everything from talent to product shortages and more, SBOs continue to have faith in the success of their businesses. In fact, the majority (80%) reported feeling optimistic about their business performing well over the next year, while 20% reported being concerned about the survival of their small businesses.

The survey data highlights that resilience remains a necessary characteristic of SBOs as they continue to face uncertainty and adapt their business models to provide the best service and products to consumers.

“As a business owner, one of the most important relationships you can develop is with your bank,” shares Amy Dinkar-Patel, TD Bank’s head of small business and commercial distribution. “Banks serve the same community where business owners live and work. This allows them to channel their local expertise to help SBOs create a successful business strategy that prioritizes growth and stability. As small businesses strive to thrive in the year ahead, having a trusted banking partner at the table will be crucial.”

Small Business Priorities

To actualize a positive business performance for the remainder of 2023, SBOs aim to bolster the financial strength of their business, beat the competition, and address talent retention.

In addition to navigating the daily challenges of running a business, SBOs believe that prioritizing the following areas will be key to achieving long-term business goals amid challenging economic conditions.

Strive to survive: Nearly one in five (17%) SBOs identified surviving as a business as their top priority for the second half of 2023. For 35% of SBOs, this means applying for a loan or line of credit this year to make critical investments in your business. that will differentiate you from the competition.

Eyes on the prize: Although one in five (20%) SBOs expressed concern about keeping up with the competition, less than 1 in 10 (9%) prioritize competing with other companies. In fact, most SBOs are focused on running their own race, with 35% choosing to prioritize attracting and retaining their customers over focusing on the competition.

Talent retention: When it comes to employees, the majority of SBOs (70%) prioritize the retention of their staff, and only 4% of SBOs select reducing employees as a priority, despite economic concerns. Reassuringly, more than one in four (26%) SBOs are prioritizing hiring more employees.

Survey methodology

This report presents the results of a CARAVAN® survey conducted by Big Village among a sample of 503 small business owners and partners. The survey was conducted live from April 19 to 27, 2023.

Small business owners are defined as respondents who have fewer than 100 employees with recent fiscal year revenue between $250,000 and $5 million.

About Big Town

Big Village is a global advertising, technology and data company. Powered by our diverse group of experts, we provide a new way of working by bringing together programmatic solutions, media, insights, and creativity all under one roof. Big Village is headquartered in New York with 12 offices in North America, Europe and Australia.

About TD Bank, America’s Most Convenient Bank^®

TD Bank, America’s Most Convenient Bank, is one of the 10 largest banks in the US and provides more than 9.8 million customers with a full range of retail, small business banking products and services and retail at more than 1,100 convenient locations throughout the Northeast, Mid-Atlantic, Metro DC, the Carolinas and Florida. In addition, TD Auto Finance, a division of TD Bank, NA, offers vehicle financing and dealer business services. TD Bank and its subsidiaries also offer personalized private banking and wealth management services through TD Wealth.^®. TD Bank is headquartered in Cherry Hill, NJ For more information, visit www.td.com/us. Find TD Bank on Facebook at www.facebook.com/TDBank and on Twitter at www.twitter.com/TDBank_US and www.twitter.com/TDNews_US.

TD Bank, America’s Most Convenient Bank, is a member of the TD Bank Group and a subsidiary of The Toronto-Dominion Bank of Toronto, Canada, one of the top 10 financial services companies in North America. Toronto-Dominion Bank is listed on the New York and Toronto Stock Exchanges under the ticker symbol “TD.” For more information, visit www.td.com/us.

Media Contacts

steve bates
steven.bates@td.com

madison brook
madison.brock@td.com