Research
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Key findings

Operations, Environment & Expectations

Woman on laptop

Small Business Operations: Small businesses have overall optimism, see consistent cash flow

This quarter, most small businesses say their view of their business health is good. They report steady cash flow and staffing numbers.

When it comes to their own business health, most small businesses are optimistic and see little change. Over half (55%) of small businesses rate their overall business health as good, on par with previous quarters going back to May 2020. Larger small businesses have a markedly more optimistic view of the health of their business: the vast majority (85%) of small businesses with 20-499 employees believe their business is in good health, compared to 64% of small businesses with 5-19 employees and 45% of small businesses with less than five employees.

As for staffing, a majority say they have retained the same amount of staff. Almost seven in ten (68%) small businesses report that over the past year they have retained the same size staff, which is an increase from the 57% of those who said the same in the previous quarter.

Only 13% of small business owners say they have increased their headcount over the past year. Small businesses with less than five employees are the least likely to report an increase (8%) over the past year. 17% of all small businesses say they have reduced staff over the last year.

Finally, most small businesses are comfortable with their current cash flow. Around two thirds of small business owners overall say they are comfortable with their cash flow, not significantly different from last quarter (66% in Q3 vs. 64% in Q2). Larger small businesses are much more comfortable with their cash flow than smaller small businesses.

66%
of small businesses say they’re comfortable with their cash flows
66%
of small businesses say they’re comfortable with their cash flows
Team member on video conference

Small Business Environment: Small businesses see slightly improving national, local economies

Small businesses are generally more optimistic about both the national economy and their local economy than they were last quarter.

One third of small businesses (34%) believe the U.S. economy is in good health, compared to 27% in Q2 (and 21% in Q1 2021). Optimism about local economies is even higher, with two in five (42%) small business owners saying their local economy is in good health. While this is still less than half of small business owners, it is a pandemic high for this measure.

Small business owners generally do not perceive a significant change in the level of competition from other local companies over the past six months. Over half (55%) of small businesses say the level of competition from smaller or local companies has stayed the same in the past six months, while one in four (26%) say competition has increased, unchanged from the previous quarter. Most small businesses also say the time spent on compliance (58%) remains the same as six months ago, on par with what they said last quarter (57%).

34%
of small businesses believe the U.S. economy is in good health
34%
of small businesses believe the U.S. economy is in good health
“Workforce and inflation are the two biggest challenges I’m facing as we emerge from the pandemic. In my case, I’m hoping immigration reform can be more than a wedge issue in the coming months. The system is and has been broken for a long time, to the detriment of my small business and the greater economy.”
Richard Cardew
Founder & Owner, Cardew Hay Co.
Buckeye, Arizona
Team working on project scope

Small Business Expectations: Small businesses get cautious about the future

Despite general optimism about their current health and the economy, small business owners are growing cautious about the future. This can be seen in steady plans to retain staffing and investment at current levels—without ramping them up or down.

Sixty-two percent of all small business owners anticipate retaining current staffing levels, an increase from the previous quarter (52%). Half or more of small businesses across all sizes and sectors plan to retain the same size staff in the next year. 28% of small businesses plan to increase staff and just 6% plan to reduce staff.

Plans for investment are also plateauing. Almost half (48%) of small business owners plan to invest about as much in their business as they did last year, which is a double-digit increase from the beginning of the year (Q1, 37%). Another 29% plan to increase investment (which is down slightly from 33% in Q2 2021), while 15% of small businesses plan to reduce investment.

Overall revenue expectations for the next year are also unchanged from the previous quarter. A majority of small business owners (58%) expect their revenues to increase in the coming year, and another 31% expect their revenues to remain the same. Across sectors, 70% of small businesses in the services sector expect revenues to increase in the next year, which is higher than small businesses in the professional services sector (59%), retail (54%), and manufacturing (42%).

62%
of small businesses anticipate retaining current staffing levels
62%
of small businesses anticipate retaining current staffing levels