Small Businesses Remain Upbeat Despite Challenge of High Costs

The latest MetLife and U.S. Chamber of Commerce Small Business Index is 72.0, up from 65.2 last quarter, driven upward by small businesses’ improving views of both the national and local economies. 

While optimism is on the rise—particularly around cash flow and the economic outlook—small businesses continue to grapple with inflation and escalating costs, which remain the biggest barriers to growth.  

“This quarter’s Index reflects a resilient small business community that’s cautiously optimistic about the economy,” said Tom Sullivan, Senior Vice President of Small Business Policy at the U.S. Chamber of Commerce. “But high costs are still holding many back from expanding and investing.”  

Inflation, Escalating Costs Remain Top Concern of Small Businesses

Key Findings: Record-High Score, but Inflation Is Top Concern  

The Index reached a record high score this quarter. Despite this, and rosier views of the economy overall, small businesses this quarter report rising costs as the biggest roadblock to growth, and inflation remains a top concern.

Small Business Index Reaches 72.0 in Q3

Among the  findings this quarter:   

• Confidence climbs: The Index score of 72.0 marks a record high for the Index, driven by improved views of both the national and local economies. 

• Cash flow comfort grows: 31% of small businesses report being very comfortable with their cash flow, up from 23% last quarter. 

• Economic outlook improves: 40% say the U.S. economy is in good health, and 46% say the same of their local economy—both up from Q2. 

• Inflation remains top concern: 46% cite inflation as the biggest challenge, and 75% say rising prices have significantly impacted their business in the past year. 

• Costs hinder growth: 34% say the cost of goods and services is the biggest roadblock to expansion. Thirty-three percent report being unable to enter new markets due to rising costs. 

To Grow, Small Businesses Invest in the Customer Experience and Software 

This quarter’s survey also asked small business owners about where they are making investments.   

Investing in the customer experience and inventory top the list. Fifty eight percent of small businesses believe it is very important to invest in marketing and sales and the in-person customer experience. Fifty one percent say the same of materials and inventory. 

Marketing and Sales Top Area of Investment for Small Businesses

Small businesses are also focusing their investments on technology. Younger business owners are more likely to prioritize investing in online customer experience, technology, and AI to support their businesses.  

Of the small businesses that said they are investing in technology, most are focusing on: 

• Business software (60%) 

• AI (36%) 

• Data management and analytics (32%)  

• Cybersecurity software (27%) 

Retail, Services Focusing on Marketing and Sales, Materials and Inventory Investments

Most small businesses also say their access to capital is good and better than it was two years ago. Sixty one percent rate their current access to capital as good and 56% agree that it is easy to find capital, both increases from Q1 2023.  

For more findings from this quarter, and to explore years of small business data, visit: https://www.uschamber.com/sbindex/. 

About the author

Thaddeus Swanek

Thaddeus is a senior writer and editor with the U.S. Chamber of Commerce's strategic communications team.

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