Small Business Outlook: Optimism Around Growth Continues

Every week, the U.S. Chamber's Vice President of Small Business Policy, Tom Sullivan, summarizes the latest data on small businesses from leading organizations, including CNBC, The Wall Street Journal, Intuit, and more, and explains what it all means for the health of America's small businesses and the national economy.

New data from a Goldman Sachs 10,000 Small Business Voices survey shows that a majority of small business owners believe access to childcare will help alleviate worker shortages that have stifled small business growth for several years. At the same time, small business owners are bullish on the future, but growth plans are constrained by high prices.

New Small Business Data

Goldman Sachs 10,000 Small Business Voices Survey on Child Care Challenges (June 20, 2024)

Summary: Many small business owners believe that solutions to childcare will help solve the worker shortage crisis.

• A majority of small business owners believe that providing solutions for access to childcare will help alleviate worker shortages that have stifled small business growth for several years.
• 35% of small business owners report their employees have cut work hours or dropped out of the workforce due to a lack of affordable access to childcare.
• 38% of small business owners report that lack of affordable childcare choices has had a negative impact on operating or growing their business.
• 62% of small business owners believe that being able to offer a childcare benefit would positively impact the recruitment and retention of employees.

National Federation of Independent Business (NFIB) Industry-Specific Economic Trends (June 17, 2024)

Summary: Some small business sectors showing more optimism than others, but high prices are crimping growth across the overall small business economy.

• Business owners in the service sector had the highest optimism among retail, construction, services, and manufacturing sectors. That optimism is primarily driven by their expectation for higher sales in the next 6 months (a 6-point increase from last quarter).
• Business owners in the retail sector are also expecting higher sales, but that sector is experiencing bad earnings right now and has a dim view of how the economy will be doing in 6-months.
• Small employers in the construction sector are experiencing positive earnings, making the sector the 2nd most optimistic. However, worker shortages continue to plague the construction industry, which has the highest percentage of unfilled job openings among the 4 sectors.
• Small employers in the manufacturing sector are also experiencing positive earnings but have the most negative view of future credit conditions among the 4 sectors.

WSJ / Vistage Small Business CEO Confidence Index (May 29, 2024)

Summary: Confidence is down across the board. The likelihood of continued high interest rates is sinking into Main Street, dampening small business outlook.

• 19% of small business owners say the economy has improved compared to 12 months ago (down 5 points from April), and 34% say that the economy has gotten worse (2 points worse than April).
• 21% of small business owners believe the economy will improve in the next 12 months (down 3 points from April), and 27% believe the economy will worsen (1 point worse than April).
• 48% of small businesses plan on increasing employees in the next 12 months (no change from April).
• 32% of small businesses expect to increase fixed investments in the next year (down 2 points from April).
• 58% of small businesses expect increased revenues in the next 12 months (down 2 points from April).
• 45% believe profitability will improve (down 1 point from April), and 20% of small business owners believe profitability will decrease (no change from April).
• 49% of small business owners believe inflation will rise at a slower rate over the next 12 months, and 8% believe inflation will rise at a greater rate than this past year. 21% believe inflation will stay the same.

Small Business Cash Flow Trend Report for Q1 2024 from OnDeck and Ocrolus (May 23, 2024)

Summary: Small business owners remain confident in their cash flow and expectations despite continued headwinds of inflation.

• The top reason why entrepreneurs start their own business is to be their own boss (37.7%), followed by the potential for greater income (25.8%).
• 93% of small business owners are expecting moderate or significant growth over the next 12 months (up 1 point from last quarter). Immigrant-owned businesses have the greatest optimism, with 41% expecting significant growth over the next 12 months.
• 72% of small businesses have more than a 30-day cash buffer. 41% keep a minimum balance of one month’s revenue in a checking account, and 56.2% have a business line of credit.
• Payroll as a percentage of revenue rose 1 point from a year ago to 19.5%.
• 92% of family-run businesses are run by first-generation business owners, and 58% of those businesses plan on passing the business on to a family member in the future.

Cox Business 2024 Small Business Survey (May 2024)

Summary: Artificial Intelligence (AI) adoption is high among small businesses and is likely to grow.

• 52% of small business owners said that AI) allowed them to increase or retain employees, and 65% of employees said the same.
• Two-thirds of small businesses invested in AI for their company last year, and 53% are boosting their investment in AI this year.
• Increasing productivity (41%) and increasing profitability (41%) are tied for the top reasons why small business owners are investing in AI.
• 53% of small business owners report that AI positively impacted their customers’ experience last year.
• The top use of AI in small businesses is for marketing (44%) followed by customer service (41%) and sales (39%).
• Over 85% of small business owners understand AI and feel comfortable using AI tools. Over 72% of small business employees feel the same.

About the authors

Thomas M. Sullivan

Thomas M. Sullivan is vice president of small business policy at the U.S. Chamber of Commerce. Working with chambers of commerce and the U.S. Chamber’s nationwide network, Sullivan harnesses the views of small businesses and translates that grassroots power into federal policies that bolster free enterprise and reward entrepreneurship. He runs the U.S.

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