Most small businesses (90%) have taken steps to prepare their businesses for an economic downturn. Despite this, many believe the climate remains predominantly favorable. And more than half (57%) admit to feeling better about the state of the US economy compared to a year ago.
The statistics come from the 2020 Hiscox Small Business Owner Risk Outlook. The report reflects data compiled by the leading small business insurer, Hiscox.
The research surveyed 1,000 small business owners in the United States. Of these, 60% of respondents cite attracting “new customers” as the principle reason for their optimism. While 51% of small business owners said they expect their profits to increase during the next 12 months.
Top Concerns Among Small Businesses
Top concerns among small business owners include attracting new clients. Thirty nine percent of participants state gaining new clients reamins their leading business worry this year. Another leading concern among small business owners relates to profitability. Thirty-four percent of participants cite “maintaining profitability” as their top concern.
The finding of the report confirms small businesses are currently feeling confident about growing their business and increasing profitability. However, it also highlights what small businesses should be mindful of and preparing for in the wake of economic volatility so they are sufficiently prepared to ride out if dip in the economic landscape reared its head.
As Kevin Kerridge, Executive Vice President of Small Business Insurance at Hiscox USA, comments in a press release:
“Small business owners are risk-takers, so it should come as no surprise that in a strong economy they are looking to expand and grow the profitability of their businesses.
“But small business owners also recognize there are many factors that could alter their plans, so many have taken steps to prepare for a change in conditions while continuing to focus on activities that will drive growth,” continued Kerridge.
2020 Hiscox Small Business Owner Risk Outlook
Other key findings of the report include the following. Seventeen percent of small businesses deem passing cost increases onto customers as a leading internal risk of running their business. The same number of participants cite receiving timely payments from customers as a principle concern.
External concerns among small business owners flagged up in the report are related to government and political issues, with 21% of respondents deeming taxes as the most pressing external issue affecting their business.
Sixty-six percent of the small business owners interviewed in the survey said they feel adequately prepared for an economic downturn, with one in five respondents feeling “very prepared.”
The report also lists some of the main steps businesses are taking to prepare for a downturn. They include reducing expenses (43%), setting up an emergency fund (38%) and increasing marketing efforts (31%).
In light of the Hiscox research, small businesses across the United States ask themselves whether they are sufficiently prepared. And what steps might help in case a lull in the economy.