SMB Survey Indicates Financial Resilience

An optimistic indicator amidst inflation and economic volatility is that small business (SMB) owners are confident about their businesses’ resilience, even as economic challenges remain pressing.

SMB Survey Indicates Financial Resilience

KeyBank’s 2024 Small Business Survey found that 65% of small business (SMB) owners are sure they could fund their operating expenses for one month without tapping into their cash reserves, in case of an emergency or crisis.

This confidence is remarkable considering the scope of the expected economic challenges. Thus, 37% of business owners anticipate that inflation will slightly increase their operating costs, while 27% of respondents expect a significant increase in operating costs within the next year.

Among the top challenges SMB owners anticipate this year, are fluctuating sales/revenue (35%), delayed payments from clients/customers (29%) and high overhead costs (28%).

Nevertheless, small business owners seem well-adjusted to the current economic challenges, taking precautionary measures to protect their businesses. Over half (52% of SMB owners) were confident their banks understood their cash flow concerns, so business people increasingly leverage bank relationships for education and resources.

As small business owners are turning to their financial institutions for advice, the top three pieces of advice they receive are: cutting costs by reducing discretionary spending (34%), establishing an emergency fund (22%) and diversifying revenue streams with new products or services (20%).

Many of the SMB owners surveyed are already implementing cost-cutting measures (32%), increasing cash reserves (30%) and exploring alternative financing options (22%) to deal with any financial challenges that may come their way.

“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. 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.”

Mike Walters, President of Business Banking at KeyBank

Despite the notable trust in banking services, almost 20% of small business owners are unsure if their banks understand their cash flow concerns. These results point to a mutual opportunity for banks and business owners to expand their relationships. Mr Walters notes that many business owners may not be aware of the advice and solutions their bankers can provide.

Nina Bobro

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Nina is passionate about financial technologies and environmental issues, reporting on the industry news and the most exciting projects that build their offerings around the intersection of fintech and sustainability.