While election uncertainty stalls business
decisions, small business owners remain resilient for the year
ahead.
CLEVELAND, Sept. 17,
2024 /PRNewswire/ -- Election years often bring
heightened uncertainty for business owners, who must navigate
potential policy shifts that could significantly impact their
operations. KeyBank's Fall 2024 Small Business Flash
Poll found that more than three in five (61%) small business
owners polled plan to delay making major business decisions until
after election results come out, underscoring the significant
impact the political environment can have on business strategy.
As the political landscape evolves, many are anticipating new
regulations, tax changes, and trade policies that could impact
their business futures. Nearly half (45%) of small business owners
surveyed anticipate changes in taxation will have the most
significant impact on their businesses—up from 38% in KeyBank's
March 2024 Small Business Survey—with
further concerns about the regulatory environment (34%) and trade
policies (31%).
Despite these concerns, small business owners remain resilient,
adjusting their business strategies to navigate potential policy
shifts that could impact their operations. The most common
strategies include increasing cash reserves (38%), delaying major
investments or expansions (36%), and diversifying product or
service offerings (31%). As one of the top indicators of the
greater economic environment in the US, business owners' financial
resilience could signal improving economic conditions while
financial challenges persist.
"The upcoming election adds uncertainty to an already volatile
economic landscape; yet, small business owners continue to
demonstrate exceptional adaptability," said Mike Walters, President of Business Banking at
KeyBank. "Their strategic approach to navigating inflation
pressures, managing cash flow challenges, and addressing evolving
market demands showcases a robust entrepreneurial spirit. This
resilience not only positions them to withstand current market
fluctuations, but also persevere through potential policy shifts,
regardless of election outcomes."
High Interest Rates Lead to Increased Challenges
Small business owners say they have faced reduced profit margins
(38%), increased borrowing costs (37%), and deferred capital
investment (31%) due to high interest rates. The survey also found
that small business owners are anticipating a rate cut, with more
than half (56%) expecting interest rate changes to positively
impact their business in the next 12 months. For now, small
businesses are adapting to interest rates by increasing cash
reserves (43%), reducing reliance on debt (36%), and diversifying
funding sources (32%).
Despite steadily high interest rates, actions small business
owners are taking now to adjust may be leading to increased
confidence and stability. Roughly three in four small business
owner respondents (72%) are confident that they could fund their
operating expenses for a month, up from 64% in March, just six
months prior. Another sign of stability, the majority of small
business owners (75%) do not foresee hiring cuts over the next
year. In fact, one in three (32%) small business owners expect to
grow their staff in the next 12 months.
Fraud Prevention Remains a Priority for Business
Owners
As business operations are becoming increasingly digitalized,
small business owners continue to express concerns about payment
fraud, identity theft and phishing and email scams.
Payment fraud (49%) and identity theft (29%) continue
to be top fraud concerns, aligning with data from the
March 2024 Small Business Survey (44%
and 37%, respectively). These ongoing concerns highlight the need
for vigilance and effective fraud prevention
strategies to protect business operations.
Implementing effective measures against fraud
presents significant challenges for business owners. The primary
obstacles include the high cost of implementation (47%), a lack of
technical expertise (42%), and time constraints (39%), underscoring
the complexities and resources necessary to establish robust
fraud prevention systems. Learn more about advice
KeyBank provides to business owners about business security and
risk management.
Women Business Owners Taking Proactive Measures Amid Economic
Uncertainty
While overall financial confidence has risen since March, women
business owners are generally more uncertain than male business
owners about navigating economic challenges and potential policy
changes. A quarter (23%) of women are unsure about their ability to
cover operating expenses for a month, compared to 15% of their male
business owners.
Despite facing unique challenges, women business owners are
demonstrating resilience and adaptability in navigating economic
shifts. While 41% of women business owners expect interest rate
changes to positively impact their businesses in the next 12 months
(compared to 67% of their male counterparts), they are taking
strategic steps to safeguard their operations. Notably, women are
more likely to adjust pricing strategies (27%) in response to
heightened uncertainty, underscoring a focus on optimizing
financial outcomes, while men are more inclined to diversify their
offerings (35%).
Methodology
This survey was conducted online by Survey Monkey, including
1,796 respondents, ages 18-99, located in the United States, who own or operate a
small-to-medium size business with an annual gross revenue of less
than $10 million, completed the
survey in August 2024.
ABOUT KEYBANK
KeyBank's roots trace back nearly 200 years to Albany, New York. Headquartered in
Cleveland, Ohio, KeyCorp (NYSE:
KEY) is one of the nation's largest bank-based financial services
companies, with assets of approximately $187
billion at June 30,
2024.
Key provides deposit, lending, cash management, and investment
services to individuals and businesses in 15 states under the name
KeyBank National Association through a network of approximately
1,000 branches and approximately 1,200 ATMs. Key also provides a
broad range of sophisticated corporate and investment banking
products, such as merger and acquisition advice, public and private
debt and equity, syndications and derivatives to middle market
companies in selected industries throughout the United States under the KeyBanc Capital
Markets trade name. For more information,
visit https://www.key.com/. KeyBank Member FDIC.
CFMA #240912-2778328
This material is presented for informational purposes only and
should not be construed as individual tax or financial advice.
KeyBank does not provide legal advice. Key.com is a federally
registered service mark of KeyCorp. ©2024 KeyCorp
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