Report: Confidence among small businesses is on the rise

Confidence among small business owners is rising, according to the latest MetLife and U.S. Chamber of Commerce Small Business Index.

The index, which measures small business owner’s confidence, stood at 62.3 in the first quarter, up from 61.3 the previous quarter. The increase reflects the fact that more small businesses see an improving economy.

“Small businesses’ perceptions of the economy are drifting upward, with businesses reporting being comfortable with their cash flow and the health of their business,” Tom Sullivan, Vice President of Small Business Policy at the U.S. Chamber of Commerce, said. “While many business owners have continued to struggle with high prices and rising wages, recent jobs reports are positive. While headwinds remain, confidence is ticking upward, and small businesses are more resilient and prepared for unforeseen challenges.”

Among the findings, 32 percent of small business owners say the U.S. economy is in good health, up seven percentage points from last quarter. Roughly 38 percent say their local economy is in good health, up eight percentage points from the end of 2023. Further, 65 percent of small businesses say the overall health of their business is good, and 67 percent say they are comfortable with their current cash flow.

“It is encouraging to see the majority of small business owners are satisfied with their business’s health and their current cash flow, despite ongoing concerns around inflation,” Cynthia Smith, head of regional business at MetLife, said. “These trends convey a sense of optimism for the future and, once again, underscore the adaptability and determination shown by small business owners in challenging economic environments.”

Overall, nearly half of small businesses continue to feel the economy is in poor health. Their biggest concern remains inflation, as 52 percent cite it as a top challenge. In addition, 29 percent said revenue was a top challenge, up seven percentage points in the quarter.

In terms of the biggest future threats, 60 percent said cybersecurity, 58 percent said supply chain breakdowns, 54 percent said another pandemic and 45 percent said inclement weather. However, 71 percent of small businesses said they are adequately prepared for future threats.

“Fortunately, we don’t worry too much about natural disasters in Chicago, but cybersecurity is another story. We have taken several steps to boost security,” Philip Preston, president of PolyScience in Niles, Ill. “This includes daily offsite backup, two-factor authentication for remote access, contracting an outside firm to test our cybersecurity monthly, and purchasing cyber insurance.”

The survey was conducted from Jan. 26 – Feb. 12, 2024.

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