A survey shows SMBs have increased revenue and cut costs to prepare for economic downturn.
- 80% of entrepreneurs say they are "confident" their business can outlast an economic downturn.
- 33% of respondents said they were growing their revenue streams, whether by expanding their consumer base, landing more contracts or other methods.
- 8% of businesses surveyed are postponing an expansion, while another 8% are reducing operational expenses when possible to prepare for a recession.
Nearly 11 years ago, the American economy experienced multiple financial crises – such as the subprime mortgage bubble – that contributed to the largest recession since the Great Depression, resulting in lost benefits and shuttered businesses. While the country is currently experiencing a resurgent job market and a growing economy, a recent survey suggests that small businesses are already gearing up for the next economic bust.
According to a survey released today by Kabbage that polled more than 500 companies across multiple industries, 80% of American entrepreneurs said they felt confident in their readiness to weather another economic crisis.
Laura Goldberg, Kabbage's chief revenue officer, said the findings demonstrate a new kind of determination from business owners. "The grit and resilience of small business owners is admirable," she said. "Despite the growing fears of economists and Wall Street, entrepreneurs are ready to rise to the challenge."
SMBs preparing for a recession by increasing today's revenue
While the survey's findings suggest a high level of confidence among SMB owners, that's not to say their expectations for the future are rosy. Kabbage said every small business owner polled said they expected a slowdown in the future, reflecting what some experts have been warning about for a while now.
In preparation, officials said entrepreneurs have begun increasing their cash flow in a number of ways to squirrel away funds for when things get tight. According to the survey, 33% of respondents said they've been actively "growing their customer base, securing more contracts or expanding sales." Additionally, 21% said they were launching new products or services, while 13% said they were pursuing business partnerships to sell to a larger customer base.
A business owner in Texas told Kabbage that they were ready to "change my marketing or selling strategies," noting that they "learned from the last recession."
A retail business owner in California said they run their business from the experience they gained in the recession. "If a recession were to happen, we would view it as an opportunity to gain a bigger portion of our industry."
A medical services provider in New Jersey told Kabbage that their practice "has sustained over 30 years of economic downturns, severe storms and just about every other obstacle. Of course, economic issues affect us, but we continually reinvent the way we manage the business to do whatever it takes to sustain it."
"The data demonstrates how every small business is unique and how market shifts impact them individually," Goldberg said. "The constant among them is their confidence to build their business and pursue their passion despite any hurdle."
Small business owners cutting costs to save for tough times ahead
Along with trying to increase incoming revenue, small business owners are preparing for the next recession by reducing the amount their businesses spend, researchers found.
According to the survey, 8% said they planned on reducing operational expenses to save more money in the long run.
"We always run lean to ensure survival if there is a downturn," one marketing agency owner in Florida told Kabbage.
Another 8% said they were building up their cash reserves by postponing a planned business expansion, while 7% said they were holding off on hiring more employees.