The U.S. economy had an incredible upswing over the last decade, but lately, small business owners’ outlooks are souring. Fears of a looming recession have been bubbling to the surface for some time, and experts are already expecting certain swaths of the population to be hit particularly hard this time around. See the latest polling and find out how to prepare your business for an economic downturn.
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Since small businesses are a major driver of the economy, a quarterly survey by CNBC and SurveyMonkey asks small business owners how they view the current economic landscape. The latest survey, conducted in April 2022, polled a national sample of more than 2,000 self-identified small business owners ages 18 and up.
While 81% of survey participants said they expect a recession this year, 43% still expect their revenues to grow over the next 12 months – two things that don’t typically go hand in hand. Considering that the U.S. Bureau of Labor Statistics says approximately 1.8 million small businesses closed between December 2008 and December 2010 as a result of the last recession, these findings should be particularly worrisome to American entrepreneurs and small business owners.
Among those polled by CNBC and SurveyMonkey, 44% rated the current economy as “poor,” and 38% cited rising inflation as one of their biggest concerns. That doesn’t necessarily mean business owners are rushing to raise prices – 35% of survey participants deemed it a “bad time” to do so. But businesses that don’t increase their prices to account for higher costs may not withstand a full-fledged recession.
Though 46% of survey respondents described the current conditions of their business as “middling,” things could get a whole lot worse if the predicted recession happens. Perhaps as a result, 61% of business owners aren’t expecting their number of full-time staff members to increase in the next year. Dialing back on hiring is one way to keep expenses steady.
Some things, however, are out of business owners’ control. More than half of those surveyed said they expect both “changes in government regulation” and “changes in tax policy” to have a negative effect on their business. Meanwhile, a little less than half predicted “changes in trade policy” will negatively affect their company. As much as people try to recession-proof their business, there is little they can do about government policies. [Related article: Is Another Economic Crisis on the Horizon?]
Of those surveyed, 70% expect higher interest rates to have a negative effect on their businesses over the next six months. The study also found that while a whopping 75% of small businesses are dealing with a rising cost of supplies, 24% are absorbing those costs. That may not be the case for long. More than 30% of respondents said they plan to raise prices if costs continue to increase. All the while, more than half of businesses are struggling with supply chain disruptions.
Whether the economy is booming or busting, all business owners should have a firm understanding of gross domestic product – the total value of a country’s goods and services. Check out our GDP overview to see how it affects companies of all sizes.
If you’re among the 8 in 10 small business owners who expect a recession this year, you can and should do certain things to prepare your small business. Without adequate preparations, you may find your business in distressed circumstances. Here are five tips to help you get ready for what may lie ahead: