Small business owners are feeling optimistic about the economic outlook for the coming year, according to the 2024 Bank of America Business Owner Report. The report reveals that 65% of small business owners expect their revenues to grow in 2024, and 55% reported making more money in 2023 compared to the previous year. Additionally, small business owners plan to expand their businesses and hire more employees over the next 12 months, although these numbers are slightly down from the previous year.
While small business owners are bullish on their own companies, they are more cautious about the national economy, with only 33% expecting it to improve in the next year. Concerns around the presidential election and political environment are at the top of their minds, with 78% worried about the election and 75% concerned about the political environment. Other top concerns include inflation, healthcare costs, interest rates, and the strength of the U.S. dollar.
Inflation remains a concern for small businesses, with 84% saying it currently impacts their businesses. As a result of inflation, small businesses have raised prices, reevaluated cash flow and spending, increased employee wages, lost sales, and reduced business costs. Fewer small businesses plan to obtain funding this year, with only 16% planning to apply for a bank loan or line of credit, down from 24% in the previous year.
Small businesses have become more reliant on credit cards, with balances up 18% since 2019. While rising credit card balances are typically concerning, adjusted for inflation, they are comparable to or even lower than 2019 levels. Small businesses are also prioritizing customer engagement by offering a unique customer experience, humanizing their business through personalized interactions, and using social media to interact with customers and promote their businesses.
Many small business owners have implemented customer engagement tactics, including personalized customer interactions, customer feedback, direct marketing, frequent sales and discounts, hosting community events, and loyalty awards/programs. Gathering customer feedback is key for small business owners, with methods including monitoring online review platforms, compiling feedback in an email inbox, requesting feedback in-person at the store, and sending email customer service surveys post-purchase.
Small business owners are digitally optimizing their businesses, with actions such as doing online banking, accepting cashless payments, expanding their social media presence, implementing digital-first marketing strategies, adding cybersecurity measures, and using a cloud-based platform. Additionally, implementing sustainable business practices has become more common for small businesses, with challenges including increased costs, customer frustration with higher prices, and customer indifference to sustainability efforts. Despite facing challenges, small business owners remain confident and plan to invest in the future growth of their businesses.
