Looking to start or grow a business? Now may be the best time to do it. The small business landscape is on an upward trajectory, and many entrepreneurs are feeling optimistic about the economy, their growth and their future success, according to our Q4 2019 Small Business Index.
Together with MetLife, the U.S. Chamber of Commerce conducts a quarterly survey of U.S.-based small business owners to gain insights on their current situations and expectations for the future. The Index reached an all-time high of 71.3 out of 100 this quarter, with 69% of small businesses reporting good health and 59% reporting an optimistic outlook on their local economy.
Below, we break down some of the highlights of the Q4 2019 Small Business Index and what it means for small business owners.
Small business trends you need to know
Based on our key findings from Q4 2019, here are some prominent small business trends that emerged in the three primary areas of our survey:
- Small business environment. A majority of small businesses are feeling optimistic about the economy — an upward trend from the start of the year. Nearly 60% of small businesses report that their local economy is in good health, and 58% report that the national economy is in good health. Competition remains steady from the previous quarter, with 14% of businesses citing increased levels of local competition. Compliance needs also remain consistent from Q3 as 22% of small businesses report spending more time and resources on compliance measures.
- Small business expectations. Overall expectations for hiring and staffing remain consistent from Q3, with 28% of small businesses looking to increase their staff and only 6% looking to downsize in the next year. Millennial-owned companies, as well as minority-owned companies, are more likely to hire new staff this year. Investment plans and revenue plans remain largely unchanged from the previous quarter. Larger businesses are also more likely to expect revenue growth than smaller companies.
- Small business operations. Almost 70% of small businesses state they are in good health this quarter, which is largely consistent with Q3 (66%). The professional services sector is the most optimistic, while the retail sector remains the least optimistic, though their reported outlook has increased since Q2 and Q3. Hiring patterns and cash flow remain consistent from the previous quarter. Over the past year, 20% of small businesses increased their staff (the highest percentage since the survey’s inception). 83% of companies also report that they are comfortable with their cash flow.
Almost 70% of small businesses state they are in good health this quarter, which is largely consistent with Q3 (66%).
The role of tech in the current small business landscape
This quarter, the Small Business Index surveyed participants about their attitudes toward technology for their business, cybersecurity and data privacy. Most small businesses adopt a pragmatic attitude toward technology, favoring standard technologies such as computer accounting systems and data privacy software to help them grow. They are also likely to adopt tools to expand their customer base (e.g., social media management and email marketing tools). Facebook is the most popular social media tool, followed by Instagram and LinkedIn.
Small businesses are less likely to use technology that is perceived as less crucial to daily operations (e.g., cloud computing and big data analysis). The Index also revealed that over 50% of businesses are concerned about data privacy and cybersecurity. In response to this, business owners believe that increased information and awareness about threats would be the best solution.
[Read: 7 Tech Tools That Make Running a Business Less Stressful]
Q4 Small Business Index in review
The key takeaways from the Small Business Index are positive:
- The majority of small businesses report that the health of the local and national economy is good.
- Small businesses report an increase in staffing, especially with millennial- and minority-owned businesses.
- Small business owners expand their use of standard technologies and tools that are crucial to daily operations.
Overall, the Q4 Small Business Index suggests an optimistic outlook for the climate of small businesses heading into 2020.
[Read: The Step-by-Step Startup Guide: How to Start a Business]
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CO—is committed to helping you start, run and grow your small business. Learn more about the benefits of small business membership in the U.S. Chamber of Commerce, here.
