Truist Survey Shows Small Business Owners Focused on Short-term Challenges at the Expense of Long-term Planning

Staff Report From Georgia CEO

Tuesday, May 14th, 2024

Following another year of inflation and economic uncertainty, small business owners are focused on short-term challenges to stay afloat while putting long-term strategy and planning on hold, according to Truist's annual Small Business Pulse Survey1. While reporting higher levels of stress than in previous years, they're optimistic about growth in 2024 and expect their business conditions to improve.

"In recent years, our survey has shown the impact that economic uncertainty and high levels of stress can have on small business owners regionally and nationally, but it has also shown the resiliency of the small businesses that serve our communities each and every day," said Scott Stearsman, head of small business banking at Truist. "Running a small business is no small feat, which is why at Truist we're focused on caring for our small business owners so they can continue doing what they do best."

Businesses have ambitious goals, struggle with long-term strategy due to short-term challenges
Despite the optimistic outlook and growth goals for the future, most small business owners have been too occupied with managing short term challenges to prioritize business planning, with only 35% reporting having a formal growth plan in place. Of that small group, very few have shared their plan with anyone outside of the business, with just 32% saying their plans have been shared with business advisors like CPAs, bankers, or lawyers.

Without formal plans in place, small business owners may not be able to address key business skills where they know improvements are needed, such as prospecting (50%) and generating referrals (43%). At the same time, they feel unprepared to handle unexpected events—just 42% believe they are prepared to manage an economic downturn, and only 41% say they are ready to handle a natural disaster. Concerns about preparedness for these unplanned challenges are understandable when considering that small business owners are already cash strapped, reporting having an average of just 4.26 months of reserves on hand.

"Running a business takes planning, research, funding and is a huge commitment of time," said Stearsman. "When small business owners look to the future, having a trusted financial partner that understands their goals and business plan can help them through the challenges and opportunities ahead."

Challenges remain but business sentiment showing signs of improvement
Similar to prior years, financial concerns remain top-of-mind for small business owners with rising costs (43%), inflation (41%), economic uncertainty (31%), and finding new customers (31%) at the forefront. As a result, small businesses have had to make tough choices, including:

  • Raising prices (50%)
  • Cutting nonessential spending (45%)
  • Accepting lower profitability (34%)

Alongside these economic challenges, small business owners are concerned about their ability to attract and maintain talent, with 31% reporting that both competing with larger companies for people and providing healthcare benefits are a major concern, followed by demands for higher pay and retention to keep the right staff (both 27%).

In response, 78% of small business owners report taking action to retain employees, including:

  • Increasing wages (45%)
  • Offering work from home/remote work options (20%)
  • Providing additional paid time off/holidays (19%)

Between small business owners taking actionable steps and inflation beginning to cool, 55% of small business owners report that they're feeling somewhat or much better about their financial well-being compared to a year ago and are expressing increased optimism around business growth conditions for the coming year with:

  • 53% of small business owners believing conditions have significantly/somewhat improved since a year ago, and
  • 62% of small business owners expecting conditions to improve significantly/somewhat for the upcoming year.

Prioritizing their businesses has impacted small business owners' own well-being
It's clear that small business owners are trying to pursue growth strategies but often suffer as a result. When asked how they handle cash shortfalls, 50% of small business owners have reduced their own salaries. Additionally, only 48% of small business owners reported having a perfect or good work-life balance, compared to 61% of respondents last year, and more than half (57%) reported being somewhat or extremely stressed. That is only 1% less than in 2021 – during the global pandemic – when stress was at an all-time high.

With this increased stress, small business owners reported increased anxiety (45%), insomnia/trouble sleeping (30%), and spending less time on self-care (29%) as some of the negative outcomes they were facing. On a positive note, they also reported they were actively setting goals to achieve a better-balanced life by scheduling personal time (43%), setting specific work/life balance goals for themselves (39%), and creating work boundaries or setting times to be unavailable (37%).

Key Southeastern markets show higher levels of stress
As small business owners across the nation are experiencing higher levels of stress than previous years, key Southeastern Markets (Atlanta, Orlando, and Nashville) are being hit particularly hard. Small business owners surveyed in these cities are more stressed compared to the national average (70% vs. 57%) and are more concerned with inflation (86% vs. 76% nationally). In fact, when it comes to top concerns, Orlando and Nashville small business owners reported that inflation, rising costs and finding new customers were at the top of the list, while Atlanta small business owners highlighted inflation, rising costs, and economic uncertainty.

These higher levels of stress are having an impact. In the Southeast specifically, participants report spending less time exercising (46%), eating right (35%), and setting family expectations to maintain their physical and mental health (11%). They are also more apt to suffer negative consequences of stress, particularly insomnia (83% vs. 72% nationally). However, when it comes to actions taken to achieve a desired work-life balance, fewer Southeast Market business owners have enlisted peers for feedback and advice (9% vs. 17% nationally).

However, these Southeast Market small business owners are staying optimistic. Small business owners in Atlanta (66%), Orlando (61%), and Nashville (61%) believe business will improve next year. Those numbers are similar to the national average of 62%.

Greater focus on customer acquisition and digital marketing
With high expectations for the year ahead, 87% of small business owners report having sales/revenue growth goals in for the next 3-5 years, including to be profitable with a modest salary for themselves (50%), to build a business they can pass on to family/loved ones (32%), and to bootstrap growth as sales/profits increase (26%).

When it comes to how to bring those goals to life, small business owners are prioritizing customer growth, with increasing sales efforts being the most common strategy (39%), followed by boosting digital marketing (24%). The vast majority of small businesses (85%) anticipate making an investment in marketing and sales, with anticipated investments focused on advertising (44%) website improvements (39%), and building an online/social media presence (36%). Of the 60% of small business owners that currently use AI applications for their businesses, (27%) report leveraging this technology for marketing purposes.