Entrepreneurs are often visionaries, spotting trends before they are evident to the rest of society. So, what do they see coming down the road?
According to a new survey, small-business owners’ economic outlook has slipped a little over the past half-year, and a majority have prepared for a possible economic recession. But at the same time, most respondents were optimistic about their own enterprises.
Twice a year, Bank of America polls more than 1,500 small-business owners on their outlook for business and the economy. The Spring 2019 Bank of America Business Advantage Small Business Owner Report found that such concerns as health care costs, political turmoil and consumer spending are weighing on entrepreneurs’ minds.
Most small-business owners—69%—said they have taken action to prepare for a future economic downturn, the survey found. Millennial business owners have been the most proactive, with 79% having made preparations in case the economy slows. In terms of specific anxieties about the economy, approximately 66% of respondents named health-care costs as a top concern, up 3 percentage points over the previous six months. This was followed closely by the political environment, with 65% of respondents worried about the situation. (This was the first time Bank of America asked business owners about political concerns for the survey.)
Other economic anxieties included:
- Interest rates, cited by 48% of respondents (up 4 percentage points from six months earlier)
- The stock market, with 47% worried (up 6 percentage points from the previous survey)
- Consumer spending, also mentioned by 47% of those surveyed (up 4 percentage points)
Despite the concerns, however, there was still a sizeable amount of optimism in the survey group, with 48% expressing confidence that the national economy will get better in the near term, even if some were preparing for a possible downturn anyway. On the other hand, the sentiment marked a drop from the Fall 2018 survey, when 55% said the national economy would improve.
Positive feelings were stronger at the local level, meanwhile, as 51% of respondents said they believe their local economies would grow. This was down slightly from 54% six months ago.
Economic concerns appeared to have only a minor impact on business plans, however. For example, the percentage of business owners planning to hire employees dropped from 27% in the Fall 2018 survey to 24% in the current edition—but that percentage was higher than in the Spring 2018 survey, when just 22% planned to hire.
Likewise, fewer business owners said they were looking to secure financing, with 12% planning to apply for a loan, versus 15% in the autumn of 2018. But this too marked a gain from just 9% in the spring surveys of both 2018 and 2017.
The small-business owners were also bullish about their ability to weather any future storms. In fact, 59% projected their revenue would increase, up from 57% in the prior survey, and 67% said they had made plans to expand their businesses in coming months.
Small-business owners—and all Americans—should take steps to prepare for economic challenges before they happen, including how a slowdown might affect their industry. The economy will always have ups and downs, and the best way to prepare is by saving and investing regularly, while avoiding unnecessary debt.