According to the recent Bank of America Business Owner Report, a majority of small and mid-sized business owners anticipate revenue growth this year, with recession fears significantly diminished. Although inflation and interest rates continue to affect their bottom lines, concerns over these issues have eased since spring 2023. Despite lingering uncertainties about the broader economy, business owners are planning to expand their operations in the coming year.
"Small business owners remain cautiously optimistic in 2024," said Sharon Miller, President and Co-Head of Business Banking at Bank of America. "With anticipated revenue increases, many are focused on engaging with customers and implementing new technologies that will help them differentiate their businesses."
The 2024 Bank of America Business Owner Report includes input from more than 1,400 small and mid-sized business owners (defined as businesses with $100,000 to $5 million and $5 million to $50 million in annual revenues, respectively). The report explores the viewpoints, goals, concerns, and outlooks of business owners nationwide.
"Our report finds that most mid-sized business owners are planning to expand their businesses and hire in the coming year," said Raul Anaya, President and Co-Head of Business Banking at Bank of America. "Most of these business owners are confident in their revenue growth as well as in the local, national, and global economies."
When examining attitudes about the national economy, business owners' outlooks varied by the size of their business: 75 percent of mid-sized business owners expect the national economy to improve over the next 12 months, compared to just 33 percent of small business owners.
Mid-Sized Business Owners (MSBOs) Outlook:
87 percent believe their revenue will increase over the next 12 months.
80 percent plan to expand their businesses in the coming year.
69 percent plan to hire more employees over the next 12 months.
84 percent reported higher revenues in 2023 compared to 2022.
Small Business Owners (SBOs) Outlook:
65 percent expect their revenue to increase in the year ahead.
39 percent plan to expand their businesses over the next year.
30 percent plan to hire more employees in the next 12 months.
55 percent reported higher revenues in 2023 compared to 2022.
Top economic concerns for mid-sized business owners include the U.S. political environment (68 percent), inflation (67 percent), supply chain issues (66 percent), and consumer spending (66 percent). Small business owners share concerns about the U.S. political environment (75 percent) and inflation (73 percent), but also about healthcare costs (69 percent) and interest rates (63 percent). Concerns about a recession have decreased for both groups, with 61 percent of mid-sized business owners and 56 percent of small business owners noting it as a concern, down from 72 percent last spring. While concerns about inflation have slightly decreased since last year, 90 percent of mid-sized business owners and 84 percent of small business owners still say inflation hurts their business.
Funding plans have increased for mid-sized business owners, with 93 percent planning to obtain funding, up from 90 percent in spring 2023. Meanwhile, 54 percent plan to apply for a bank loan in the next 12 months. In contrast, funding and loan application plans have decreased for small business owners, with 71 percent planning to obtain funding (down from 82 percent last spring) and 16 percent planning to apply for a bank loan or line of credit this year (down from 24 percent last spring).
According to the Bank of America Institute's recent Small Business Checkpoint, small businesses have become more reliant on credit cards, with balances up 18 percent since 2019. Despite rising balances, inflation-adjusted credit card balances are comparable to, or lower than, 2019 levels. Credit card spending has decreased across all categories since 2023, suggesting small businesses are managing spending and optimizing cash flow. However, an increasing portion of credit card balances are revolving, carrying from one month to the next, after a decline in this behavior during and after the pandemic.
Running a profitable business involves personal and professional sacrifices for many business owners. Seventy percent of small business owners report making trade-offs to maintain profitability, such as increasing prices (47 percent), working more hours (45 percent), and reducing their own salary (32 percent).
Business owners are increasingly implementing digital tools across their operations. Over the past 12 months, most business owners (99 percent of mid-sized business owners and 71 percent of small business owners) have digitally optimized their businesses. This includes conducting business banking online or via an app, accepting more forms of cashless payments, and enhancing their social media presence. These digital tools help business owners save time, stay organized, reach new customers, increase customer satisfaction, and manage cash flow.
Most mid-sized business owners (89 percent) plan to implement artificial intelligence (AI) tools this year to streamline payroll and bookkeeping (57 percent), assist with hiring efforts (49 percent), and stand out from competitors (44 percent). Meanwhile, 37 percent of small business owners plan to implement AI tools this year for similar purposes, including differentiating themselves from competitors (47 percent), streamlining payroll and bookkeeping (36 percent), and assisting with hiring efforts (25 percent).
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