Despite Inflation Concerns, Small Businesses Remain Optimistic

Overall, the survey’s findings show that despite continued concerns around inflation, small businesses remain optimistic about future revenue, investment, and hiring. Consistent for the past two years, more than half (55%) of small businesses say inflation is their biggest challenge this quarter. Conversely, seven in ten small businesses (72%) say they expect next year’s revenue to increase, stable for the past two quarters and up significantly from Q4 2023 (65%). Meanwhile, 46% say they plan to increase investment, and 41% say they anticipate increasing staff in the next year. Both of these last measures increased significantly from the start of 2024, but are similar to those recorded last quarter.

Small businesses are also more positive about the national and local economy compared to Q4 2023. More small businesses now say the U.S. economy (32%) and their local economy (38%) are in good health compared to this time last year (25% and 30%, respectively).

When it comes to the issue of regulation, small businesses are slightly more likely than last quarter to report that there is an increase in the time or resources spent fulfilling compliance and regulatory requirements compared to six months ago. Small businesses also feel that complying with regulations is more expensive for them than it is for their larger competitors. About seven in ten (69%) small businesses say that small businesses spend more per employee to comply with regulations than larger competitors.

Dealing with regulatory requirements remains a pain point for many small businesses and a majority say it’s affecting their growth. Fifty-one percent of small businesses say that licensing, certification, and permit requirements make it harder to grow their business and 47% say that their business spends too much time fulfilling regulatory compliance requirements.

When it comes to finding solutions for regulatory compliance, small businesses turn to a mix of experts and familiar, everyday tools. Small businesses are most likely to say they would turn to a general Google search (77%) when facing a complex compliance issue, followed by other business owners (67%), consultants (65%), and outside legal counsel (59%). Fewer, 43%, say they would turn to social media.

Finally, the survey finds that the Holiday season continues to loom large for small businesses—in terms of profits, hiring, and unique offers. Seven in ten small businesses (70%) say the holiday season is important for their overall profit for the year, levels that are slightly down compared to Q4 2022 (79%).

One in five small businesses (22%) say they plan to hire seasonal employees, down slightly from Q4 2022 (28%). Notably, small businesses who plan to hire seasonal employees are especially likely to say they also plan to offer seasonal discounts (84%) or extend regular business hours (77%). Over half (54%) of small businesses in general say they plan to donate to charitable organizations.