New confidence has emerged among small business owners despite the idea of a recession.
This perspective is revealed in the latest Small Business Recovery Report from Kabbage.
In its sixth installment, the report tracks recovery trends and growth prospects from a survey of 550 small business leaders. For many, the pandemic has brought a positive and permanent outlook to an uncertain economic future. Small business owners stay confident by focusing on branding, marketing, adjusting for inflation and prioritizing online sales to beat the competition.
Survey data shows that most small businesses in the US are anticipating an economic recession and considering its effect on them. While more than four in five respondents (83%) are concerned that a recession is imminent, 80% of businesses are confident they can weather it.
For respondents who are confident they can survive a recession, the pandemic was cited as the main reason (31%) felt that way, saying it helped them find a greater sense of resilience and readiness to be successful in the future despite the economic turmoil.
As small businesses weigh the potential recession, they face economic headwinds such as inflation and supply chain disruptions. In the March 2022 Small Business Recovery Report, respondents reported an average price increase of 21% across industries, largely due to increased costs from suppliers (54%) and raw materials (45%).
New data shows how inflation is changing the way small businesses manage their cash flow. Among those who have applied for a line of credit this year or plan to apply in the next six months, 46% said they would most likely use the extra capital to cover the cost of inflation.
Similarly, the report showed that more than half (53%) of small businesses expect their business to be affected by supply chain disruptions in the next three months to a year. The new report finds that supply chain disruptions continue to be a problem, with 24% of small businesses planning to use cash to cover costs due to supply chain shortages.
Given the market and its complexity, 45% of businesses are trying new competitive strategies compared to before the pandemic. This is particularly true among respondents from medium and large small businesses.
A total of 57% of the surveyed medium and large and 29% of the smallest small businesses cite branding as the main differentiator from competitors.
The latest Small Business Recovery Report showed significant momentum around small business marketing. A combined 44% of medium and large small businesses report that their business now offers marketing through social media and digital channels that are different from their competitors.
In the March 2021 Small Business Recovery Report, respondents said their monthly online sales accounted for an average of 57% of total revenue. Now, as more time has passed since the peak of the pandemic, that number has dropped to 40%; however, new data shows that some unexpected industries such as healthcare saw a boost in online sales, while others such as hospitality saw a decline.
Thirty-six percent of healthcare-related companies say they are unlikely to get the majority of their revenue online, but have seen an increase in online sales since the pandemic.
Conversely, 32% of hospitality companies said they usually get most of their revenue online, but have seen a decline in online sales since the peak of the pandemic.
The recovery report shows that small businesses continue to adapt and prioritize different strategies as market challenges remain constant. Whether it’s the ongoing pandemic, a potential recession, or other issues, entrepreneurs will continue to look for a will and a way to survive and thrive.
Gina Taylor Cotter is executive vice president and general manager of US Small Business Banking and Kabbage. She wrote this for InsideSources.com.