Small business owners are optimistic about their businesses, even though economic challenges remain.
That was the finding of KeyBank’s recent 2024 Small Business Survey — which found that 65% of small business owners feel confident they could fund their operating expenses for one month with their cash reserves, if an unexpected need arose.
Despite that confidence, 37% of the respondents anticipate that inflation will slightly increase their operating costs in the next 12 months, while 27% expect a significant increase in operating costs over the same period.
The top challenges small business owners anticipate this year, according to a press release are: fluctuating sales/revenue (35%), delayed payments from clients/customers (29%) and high overhead costs (28%).
The survey found that small business owners are taking precautionary measures to protect their businesses, their employees and the communities they serve, the release stated. Among the steps they are taking are:
— Implementing cost-cutting measures (32%)
— Increasing cash reserves (30%)
— Exploring alternative financing options (22%)
“Running a business is not an easy task, and when coupled with uncertain economic conditions, rampant inflation and high interest rates, small business owners are faced with ambiguity,” Mike Walters, president of business banking at KeyBank, said in a statement. “Their resilience is a testament to years of weathering financial uncertainty, and with their confidence remaining strong they’re able to power through the last leg of inflation and keep themselves on track for economic growth.”
Banking Relationships
When it comes to relationships with their financial institutions, respondents to the survey said they are turning to their banks for advice as they navigate cash flow and business operation concerns. The top three pieces of advice owners have received from their banks are: cut costs by reducing discretionary spending (34%), establish an emergency fund (22%) and diversify revenue streams by introducing new products or services (20%).
While more than half (52%) of small business owners are confident that their banks understand their cash flow concerns, almost 20% are unsure.
“In times of uncertainty, trusted advice from qualified professionals can be a lifeline for business owners, but many may not be aware of the advice and solutions their relationships with their bankers can provide,” Walters added. “Bank services extend beyond just traditional checking and savings accounts to cash flow and credit solutions. Maintaining a strong relationship with your bank can lead to uniquely tailored strategies.”
Fraud
Fraud prevention has become a focus for small business owners that are monitoring evolving fraud tactics and looking to implement preventative measures to stop potential future attacks, according to the release.
As business operations have become mainly digital, small business owners are most concerned about payment fraud, such as unauthorized transactions or unauthorized electronic fund transfers (44%), followed by identify theft (37%), malware and ransomware attacks (28%) and phishing and email scams (27%).
Navigating the U.S. Presidential Election
As election season approaches, the “political noise” is magnified for small business owners, as potential policy changes could affect their business directly, the survey found. The top policy changes most owners are paying attention to are:
— Taxation (38%)
— Employment and labor laws (25%)
— Healthcare policies (25%)
Methodology
The survey was conducted online in March by Survey Monkey. Participants included 1,983 respondents, between the ages of 18 and 99, located in the United States, who own or operate a small-to-medium size business with an annual gross revenue of less than $10 million.
Headquartered in Cleveland, Ohio, KeyCorp provides deposit, lending, cash management, and investment services to individuals and businesses in 15 states including Pennsylvania, under the name KeyBank National Association. KeyBank operates a network of approximately 1,000 branches and approximately 1,300 ATMs, including locations in Berks, Chester and Montgomery counties.
