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10 Feb Survey Results: Small Business Optimism Remains Strong in 2020
The QuickBridge Small Business Owner Survey takes the economic pulse of the small business community every year. This year, we collected responses from over 560 small business owners across the U.S. We found that despite the economic uncertainty that often accompanies an election year, the majority of small businesses remain optimistic about the economy and their overall business prospects in 2020.
Small Business Owners Expect Strong Sales
Our survey results indicate strong small business confidence in the U.S. economy in 2020, mirroring 2019 survey results. While the U.S. economy only experienced 2.3% growth in 2019 – the lowest GDP growth rate in three years – 65% of business owners indicated that they are confident growth will increase in 2020.
Indeed, according to the U.S. Bureau of Economic Analysis, economic growth is projected to improve and come in at 2.6% in 2020, followed by a forecasted 2.9% in 2021. This growth is based largely on productivity gains that are expected to come with a gradual increase in capital spending and overall consumer confidence in the second half of the year.
Understandably, some respondents expressed uncertainty about how the political climate and ongoing international trade issues would impact various aspects of their business. However, 81% indicated that they expect their business sales to increase in 2020. Just 14% anticipate flat sales and only 5% project their sales will decrease.
This confidence can also be seen in small business owner’s plans to add staff in 2020. Close to 60% plan to add staff and only 3.4% anticipate a reduction in staff. In addition, 68% of small business owners expect their overall cash flow to be positive in 2020.
Small Business Capital Spending to Increase Despite Caution
According to Forbes, business capital spending declined in the third quarter of 2019 after two flat quarters, indicative of uncertainty related to international trade negotiations. In 2020, however, capital spending is expected to be more robust due to anticipated economic growth and lower financing costs.
Business owner sentiment seems to be echoing this cautious optimism. When asked how they expect the amount of money they allocate for capital spending to change, 50% indicated they expect it to increase, 38% expect it to remain the same, while close to 12% expect it to decrease.
Tariffs and Taxes Don’t Make or Break Small Businesses
While ongoing international trade issues have caused some business owners to proceed with more caution, 66% indicated that the U.S.-China trade situation specifically will have no effect on their business in 2020. The same goes for recent tax law changes, with 48% of respondents indicating no impact to their overall tax burden.
Still, over 27% indicated the tariff situation will cause their costs to increase, which is more indicative of the larger business risks surrounding international trade, which include costlier imports, shorter contracts, slower customs procedures, and reduced consumer demand.
Securing Capital Remains Biggest Small Business Challenge
Small businesses face a myriad of challenges, especially in their first few years of operation when they’re trying to build traction. According to small business owners surveyed, the biggest challenge they face in 2020 is securing capital. According to one respondent, “For a small business like mine, I just need to secure some working capital. For unforeseen business expenses, for slow times of the year, to pay wages, and to buy new equipment.”
Not surprisingly, major small business challenges are often the byproduct of limited access to capital. Other top challenges for small business owners in 2020 include growth, growing profits, hiring employees, increased operational costs, and developing new products/services.
Watch our summary video for complete results of the QuickBridge 2020 Small Business Owner Survey:
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