Index Remains Steady As Views of Economy Drift Upwards

According to the poll taken between January 26 – February 12, 2024, small businesses are slightly more optimistic about the economic environment: one-third (32%) now say the U.S. economy is in good health, up seven percentage points from last quarter. In addition, roughly two in five (38%) say their local economy is in good health, up eight percentage points from the end of 2023. However, overall views remain muted: nationwide, nearly half of small businesses continue to feel the economy is in poor health.

Similar to last quarter, half (52%) of small businesses report inflation as their biggest challenge. Inflation has consistently been the top concern for small businesses since Q1 2022. While revenue continues to trail inflationary pressures as a top concern, slightly more now say it is their biggest challenge. In fact, three in ten (29%) small businesses now say revenue is their biggest challenge, up seven percentage points from Q4 2023 (22%), and closer to attitudes from late 2021.

This quarter’s survey also explores small businesses’ perceptions of future threats and crisis planning they have undertaken in response to those threats. Cybersecurity tops the list of potential threats they are concerned about (alongside supply chain breakdowns), but is also something many have taken steps to guard against and recover from. In fact, almost half (48%) of small businesses say they have trained their staff on cybersecurity measures.

While most say they feel prepared to deal with a range of threats against their business, the overall level of confidence is moderate, showcasing a potential area where outside resources and education could be welcome.

In addition, a significant minority (27%) of small businesses say they are one disaster away from shutting down. However, four in five small businesses say they have a clear idea of how to change their business if it starts to struggle, and 71% say they are adequately prepared for future threats. Their perceived preparedness varies by threat. A majority of small businesses feel prepared for cybersecurity threats (73%), another pandemic (67%), or a supply chain breakdown (61%). They feel most prepared for inclement weather (77%) and least prepared for an act of terrorism (44%).

Small businesses are worried about a range of threats with the potential for supply chain challenges and a future pandemic topping the list. Fifty-eight percent of small businesses say they are concerned about a supply chain breakdown and 54% say they are concerned about the threat of another pandemic. More say they feel prepared to handle another pandemic than a future supply chain breakdown (67% vs. 61%, respectively).

A majority say their supply chain is robust enough to survive future breakdowns. To mitigate these supply chain concerns, about one-third of small businesses (35%) say they have built out existing supply chains in the past year, most commonly by strengthening existing relationships with suppliers or seeking out additional suppliers.