Index Steady As Optimism Over Future Hiring and Revenue Stay High

Helping drive this continued optimism among small businesses are bullish expectations for future revenue and upbeat plans for next year’s headcount. Seventy-three percent of small business owners expect next year’s revenue to increase—identical to last quarter and the highest number recorded since the Index began in 2017. Similarly, more than two in five (44%) anticipate increasing staff in the next year, which is near Q2 2023’s high water mark (47%).

Most survey measures are consistent with last quarter. Two in three small businesses continue to view their business as being in good health; this measure has hovered around 66% for most quarters dating back to Q2 2022. A similar share (68%) report feeling comfortable with their business’s cash flow—a slight, but not significant, shift from 73% last quarter and a return to attitudes from Q4 2023 and Q1 2024. A greater percentage of small businesses (48%) are negative about the national economy than positive (35%). And 38% rate the economy in their local area as good compared to those who believe their local economy is doing poorly (34%). Neither the cash flow nor local economy changes are statistically significant.

For over two years small businesses’ single top concern has been remarkably consistent: inflation. This quarter, 56% of small businesses select inflation as their biggest challenge. Revenue (28%) remains a distant-second challenge, followed by affording employee benefits (16%), and rising interest rates (15%, which has declined since peaking in Q2 2023).

This quarter’s survey also explores small businesses’ perceptions of the upcoming presidential election. According to the findings, they are more interested than the last presidential election cycle (2020), concerned about the economy/inflation, and hoping that their elected representatives come to Washington ready to compromise. The vast majority also think it’s very important not to raise taxes on business.

Seven in ten (71%) small businesses say they are more interested in the 2024 election than the previous presidential election, including 42% who are much more interested in this year’s election. They are also voting with their interests as small business owners in mind: Four in five small business owners say that a candidate’s policy positions are a factor when determining who they support, including about half that say they are a major factor.

The economy/inflation is the single most important issue that small businesses would like the new U.S. Congress and presidential administration to address in 2025, with a majority (59%) saying the economy/inflation is the most important priority. Following the economy/inflation, small businesses choose taxes (36%), healthcare (19%), or immigration reform and border security (18%) as the first or second most important priorities that the new U.S. Congress and president should focus on.

Four in five small business owners (84%) feel that partisan gridlock is a serious problem in the federal government today. This holds true across industries, company size, and the age of ownership of the business. There is also a broad desire among small business owners to see political leaders move beyond this partisan gridlock and reach compromise to get things done. Three in four (75%) say it is important for political leaders to compromise in order to get things done, up from 68% ahead of the 2020 presidential election. Again, this is true for a majority of small business owners across industries, company size, and age of ownership.

When it comes to taxes, most small business owners (88%) say that it is very important to them that the next Congress does not raise taxes on businesses.