Small Businesses Will Do Well in 2023

There’s no denying the global pandemic did a number on the economy. Along with the rest of the world, the U.S. suffered financial losses. Still, all is not doom and gloom. While there are no guarantees, many economists predict that small businesses will do well in 2023.

 

The U.S. economy had a surprising third quarter

The Commerce Department reports gross domestic product (GDP) rose 0.6% in the third quarter of 2022. That represents a 2.6% annual rate of growth. While that growth falls below historic trends, it serves as a reminder that the economy is not collapsing. Not only might that be good news for small businesses, but it could positively impact investors across the board.

 

Business owners recognize the challenges

A new report commissioned by Bank of America surveyed more than 1,300 small business owners across the U.S. While focusing on women and minority-owned businesses, business owners across the board are optimistic about the future.

For the survey, 1,308 small business owners were contacted to participate in the survey. The business owners had revenues between $100,000 and $4,999,999 and employed between two and 99 employees.

• • • • • • • • 83% plan on obtaining funding for their business
              • 77% of business owners feel equipped to handle a recession
              • 66% of small business owners expect an increase in revenue
              • 52% plan on expanding their business

While the outlook is promising, small business owners do have some concerns, primarily around inflation.

• • • • • • • • 88% said that inflation is currently impacting their business
              • 88% said they have been impacted by supply chain issues
              • 80% have raised prices to try and cope with continued inflation
              • 75% have identified inflation and commodity pricing as their primary concern

Another area of concern continues to be labor shortages, with shortages continuing to impact their business.

• • • • • • • • 49% of business owners are working more hours to offset labor shortages
              • 38% plan on hiring additional staff in the next 12 months
              • 31% are raising wages to attract potential employees
              • 30% continue to have trouble filling current job openings

The report also specifically addressed issues that women and minority-owned businesses continue to have. For example, 40% of Black business owners do not believe they will ever have equal access to business capital. 29% of women business owners, 27% of Hispanic-Latino business owners, and 22% of Asian-American business owners feel the same.

But women and minority-owned business owners feel even more confident about the future:

• • • • • • • • 72% of Black business owners expect revenue to increase
              • 71% of Hispanic-Latino business owners expect revenue to increase
              • 63% of women business owners expect revenue to increase
              • 62% of Asian-American business owners expect revenue to increase

Over the next twelve months, women and minority business owners also expect to expand their business.

• • • • • • • • 47% of women business owners expect to expand their business
              • 59% of Hispanic-Latino business owners expect to expand their business
              • 60% of Asian-American business owners expect to expand their business
              • 65% of Black business owners expect to expand their business

Despite the challenges that all small business owners face in today’s economic climate, it’s clear that most owners are optimistic about what the future holds.

 

Many business owners have help

Another interesting aspect of the BOA survey is how many business owners can count on family to help when staffing or other issues arise. For example, 80% of Asian Americans and Pacific Islanders (AAPI) business owners say they get support from their families.

 

Hiring serves as an indicator

The shortest recession in American history occurred in the early months of the pandemic. Since that time, financial experts have warned of another. According to the experts, it’s inevitable that the U.S. economy will suffer another recession. It’s the way the economy works. The problem is this: No one knows when the next recession will hit, whether it will be devastating, or if we’ll weather it with fewer-than-expected problems.

But all of that is white noise to business owners who simply need more employees. Across the country, the demand for new employees has continued to rise. Even as business owners prepare for the day a recession arrives, they’re busy trying to attract new talent.  Perhaps it’s the fact they’re busy enough to need new workers that gives them reason to believe their businesses will do well in 2023.

 

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