In September, the NFIB Small Business Optimism Index saw a slight increase, rising by 0.3 points to 91.5. However, this marks the 33rd straight month the index remains below the 50-year average of 98. The Uncertainty Index jumped significantly, increasing by 11 points to 103—the highest level on record. Amid these challenges, 51 percent of small business owners reported capital outlays in the past six months, a drop of five points from August, while inventory gains also slipped, with a net negative 13 percent, the lowest since June 2020.
"Small business owners are feeling more uncertain than ever," said NFIB Chief Economist Bill Dunkelberg. "This uncertainty makes them hesitant to invest in capital or inventory as inflation and financing costs continue to squeeze their margins. While the holiday sales season offers some hope, many Main Street business owners are left wondering if conditions will improve."
Key findings from the report underscore the difficulties many small businesses are facing:
Inventory Decline: The net percent of owners reporting inventory gains dropped four points to a net negative 13%, the lowest level recorded since June 2020.
Rising Loan Costs: The average rate paid on short-maturity loans rose to 10.1%, the highest level since February 2001. Additionally, a net 12% of owners reported paying a higher rate on their most recent loan, although this is down from August's levels.
Hiring Challenges: Thirty-four percent of small businesses reported job openings they could not fill, a six-point drop from August and the lowest level since January 2021. Many owners continue to struggle with finding qualified applicants for open positions.
Capital Outlays: Fifty-one percent of owners reported capital expenditures in the past six months, down five points from August, marking the lowest rate of spending since July 2022.
Compensation Growth: A net 32% of owners reported raising compensation, down one point from August, and the lowest reading since April 2021. Despite these wage increases, labor quality remains a concern for many.
Inflation Pressure: Twenty-three percent of small business owners continue to report inflation as their most significant challenge, citing higher input and labor costs as key drivers, even though this is slightly down from August.
With inflation, labor shortages, and rising loan rates creating pressure, small business owners are seeking ways to cope with financial and operational challenges. One effective solution is hiring a fractional or outsourced CFO, as small businesses often lack the expertise to manage financial complexities during uncertain times.
A fractional CFO helps owners make more informed decisions regarding cash flow, borrowing, and cost management, providing strategic insights without the expense of a full-time executive. This financial leadership supports businesses in navigating challenges, from optimizing capital outlays to handling inflationary pressures.
As inflation remains the top concern for 23 percent of owners, financial management becomes even more critical. A fractional CFO provides high-level strategies for capital allocation, cost control, and long-term planning, helping businesses adapt to rising uncertainty and financing costs.
Outsourcing CFO responsibilities gives small businesses the expert financial guidance needed to manage cash flow, improve borrowing strategies, and reduce unnecessary costs, allowing for strategic investments. This expertise helps businesses adjust to tough conditions on a part-time basis.
In times of uncertainty, having a fractional CFO can be the lifeline that enables small businesses to not only survive but also grow.
If you are a business owner or CEO within the San Francisco Bay Area and Silicon Valley, in need of an experienced fractional or outsourced CFO to help your company control costs, increase profit margins, improve cash flow as well as identify strategic growth opportunities, our highly skilled outsourced CFO services provide direct access to high-quality expertise in a cost-effective manner.
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