More than one index is reporting small businesses in the U.S. are feeling more confident than ever. The latest MetLife & U.S. Chamber of Commerce Small Business Index echoes that sentiment. And in this case, the index reached an all-time high with 71.3 for the fourth quarter of 2019.
Q4 2019 Small Business Index
All 50 states are reporting small businesses saw revenue growth in 2019, unemployment is at a 50 year low, and they are also approving of the job the President is doing at record highs. And this optimism is taking place while the trade talks with China are going along with other economic uncertainties.
But even with these uncertainties, small businesses are doing better. In the press release for the index report, Tom Sullivan, vice president of small business policy at the U.S. Chamber of Commerce, says as much.
Sullivan says, “Through this quarter, small business optimism has continued to grow reaching unprecedented levels. These high levels of confidence have prompted Main Street employers to increase hiring.” Adding, “It is remarkable that millennial-owned and minority-owned small businesses have aggressive hiring plans despite the tight labor market.”
Highest Number in Index History
According to the survey for the index, 71% of small business owners have a strong outlook on their environment. Furthermore, they feel optimistic about the health of their business. This is responsible for the high 71.3 overall index number regarding their confidence level about their business and financial future.
image: MetLife & U.S. Chamber of Commerce
What is more, their confidence level is responsible for 20% of the owners reporting they increased the size of their staff in the past year. By the way, this is also the highest percentage in the history of the index.
Additional factors driving this optimism include positive outlook in their local economy (62%) and they also believe the U.S. economy is in good health (57%).
Other Key Findings
More than two thirds or 69% are reporting overall good health, up by three percent from the last quarter. This is the first time it has gone up four consecutive quarters (66% in Q3 2019, 65% in Q2, and 64% in Q1).
Another strong number is 83% of small businesses feel comfortable with their cash flow, which is also another high. Strong cash flow greatly determines how small businesses do moving forward. Whether it is expanding to another location or just investing in their company, strong cash flow is key.
In terms of hiring, both millennials and minority business owners are looking forward to increasing their staff. For millennials, 51% of them say they plan to grow their staff, while only 25% of baby boomers plan to do so.
Small Business and Technology
This time around, the survey also asks small business owners about their attitude on technology adoption, cybersecurity, and data privacy. It is an issue all businesses have to deal with in today’s digital ecosystem.
Casey Stanley, Vice President of Ontario Systems and a U.S. Chamber Small Business Council Member, highlights the importance in the release.
Stanley says, “No matter what business you feel like you’re in, almost every company now is a “tech company” — or should be.” He goes on to say businesses that make investments in technology will lead, be more profitable and they can weather bad times.
Not surprisingly the index reports 54% of owners worry about cybersecurity threats, while another 50% say data privacy. However, cost is of big concern for 44% of small businesses when it comes to adopting new technologies. Additionally, they say time for IT training (25%) and lack of understanding of new technologies (19%), are also concerns.
Of those using technology, small businesses prefer standard technologies to help them grow. The vast majority (84%) say they use computer accounting systems. Data privacy software (53%), social media management (84%) and email marketing tools (50%) follow.
image: MetLife & U.S. Chamber of Commerce
The tools they are least likely to use are smartphone apps for scheduling (46%), cloud computing (46%), customer relationship management (CRM) systems (28%), and big data analysis (15%). Less than half of all small businesses use these tools.
The Q4 2019 Small Business Index is a collaboration between MetLife and the U.S. Chamber of Commerce, which lends to the credibility of the data in the survey. It is part of a multiyear collaboration between both organizations to raise the voice of America’s small business owners. The goal is to highlight the role these businesses play in the overall economy of the country.
The survey was carried out between September 27 and October 25 with the participation of 1,000 small business owners.
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Image: MetLife & U.S. Chamber of Commerce
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This is great for there is definitely some optimism. I wonder how this can translate into progress for businesses.