Operations, Environment & Expectations
Small Business Operations: Small businesses report consistent health, cash flow comfort
Nearly two-thirds (64%) of small business owners report that their business is in good health, unchanged from Q3 2022 (65%) and Q2 2022 (66%). Consistent with previous quarters, small businesses that employ more people are more comfortable with their health. Roughly three in five (58%) small businesses with fewer than five employees say they are in good health, compared to 70% of small businesses with 5–19 employees, and 82% of small businesses with 20-500 employees. Each of these measures is consistent with last quarter.
Just over two in three (67%) small business owners say they are comfortable with their cash flow. This is consistent with last quarter (66%), which saw the measure drop by seven percentage points compared to Q2 2022. Similar to attitudes around business health, small businesses that employ more people are more comfortable with their cash flow— a pattern we have observed consistently over the past few years. Three in five small businesses with fewer than five employees (60%) are comfortable with their cash flow, while 75% of small businesses with 5–19 employees and 86% of small businesses with 20–500 employees are. Again, each of these measures remains at a similar level as last quarter.
Nearly two-thirds of small business owners (65%) say their business retained the same staff size over the past year, while nearly one in five (19%) indicate they increased staff. This has remained stable over the last year. Again, companies with more employees are more likely to say they have increased their staff size than those with fewer employees—a pattern observed for over a year.
Small Business Environment: Small businesses see stable national and local economies
A narrow portion of small business owners believe the U.S. economy (27%) and their local economy (30%) is in good health, both consistent with Q3 2022 readings (28% and 31%, respectively).
The share of small business owners that rate the national economy as good has remained stable over the past year, while the majority have felt the macroeconomic outlook is poor or average (at best). However, perceptions of the local economy declined between Q2 and Q3 2022 (from 37% to 31%), reaching the lowest point recorded since Q2 2021, and remain low today.
In addition to this consistency since last quarter, there is also consistency across regions. National and local economic perceptions are largely similar across regions. Small businesses in the services industry are more pessimistic about the U.S. economy and their local economy than those in retail and professional services.
A similar share of small business owners report spending more time on licensing, compliance, or other government requirements this quarter (35%) as the last two quarters (37% for both). Similarly, roughly the same share of small business owners report facing increased competition from smaller or local companies this quarter as last quarter (29% vs. 32%).
JobsInTheUS.com, Westbrook, ME
Small Business Expectations: Most small businesses expect revenue to increase next year
As with perceptions on business operations and the economy, small business owners’ expectations for the future are very similar to last quarter—including a majority that expect climbing revenues next year.
Two in five small businesses say they intend to increase staff over the next year, while roughly three in five (63%) say they expect their revenue to increase. Each of these are essentially unchanged from last quarter. Nearly half (47%) say they expect to increase investment in the upcoming year, up slightly, but not significantly, compared to Q3 2022 (42%).
In some potential signs of burgeoning optimism for the year ahead, more small businesses in the services sector say they plan to increase staff than last quarter (37% vs. 25%).