Most small and midsize business owners think a recession is on the way
New study suggests many of them believe their company may not survive.
A new survey indicates that nearly three-quarters (71%) of small and midsize business owners in the United States believe an economic recession looms — and if it hits, 70% of them fear their business won’t survive.
That’s one of the alarming takeaways from Clarify Capital’s recent survey of more than 1,000 micro- to medium-size business owners. Nearly half of all respondents think the recession will hit before the end of 2022, and 82% have increased their savings to prepare for it. This data tracks with Bloomberg’s estimate from July that there is a 50% chance of the economy slipping into a recession by year’s end.
The age of their business affected how concerned owners were about surviving a recession. Owners of businesses 10 years and older were the least likely to fear their business wouldn’t survive, and most predicted it would take four to six months for operations to return to normal.
“To curb the potential effects of a recession, all businesses have changed their operations or planned to in the next six months,” according to the survey. “The most common change was increasing marketing or sales techniques, with 46% of respondents planning to spend more in those areas — especially businesses that have been open for 6 to 10 years. Some of the marketing tactics business owners planned to increase amid a recession included influencer marketing (14%), traditional advertising (13%), email marketing (13%), and SEO (7%).”
Some business owners also indicated plans to reduce operating expenses by cutting staff. More than 60% identified “quiet quitters” — those who lack engagement at work — and those employees might be among the first to be let go. Owners of businesses 3 to 5 years old were most likely to lay off employees during a recession, according to the study. Those respondents also were most likely to be stressed about both their business (80%) and personal (85%) finances.
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The good news is that business owners aren’t entirely pessimistic. Only 5% say they were not optimistic about their business’ wellbeing over the next six months.
“A recession can have resounding impacts on small businesses, many of which have already been struggling recently due to the pandemic and inflation,” the study concludes. “Businesses can prepare by increasing their savings, lowering their operating costs, or changing their marketing strategies to bring in new clientele.”