Nearly eight out of 10 small business owners feel a strong degree of confidence that their companies will grow over the next year even amid rocky market conditions, according to a new survey.
The ninth annual First Citizens Bank Small Business Forecast found 79% of owners to be somewhat or very confident their small businesses will experience growth over the next 6-12 months, citing bank loans (57%), business credit cards (49%) and non-bank loans (25%) as the key funding proponents supporting expansion.
The survey includes responses from business owners in 10 states: Arizona, California, Colorado, Florida, Georgia, North Carolina, South Carolina, Texas, Wisconsin and Virginia.
Confidence is strongest among Georgia-based owners, 94% of whom feel secure in their businesses’ likelihood to grow. North Carolina and South Carolina owners expressed strong confidence in their ability to grow their business, with each state capturing 85% growth confidence. Texas rounds out the top four most confident states, with 81% stating they are optimistic about next year’s growth.
“To see confidence of this caliber feels incredibly promising,” said Doug Sprecher, executive director of sales strategy at First Citizens Bank. “The First Citizens Bank Small Business Forecast continues to show the resiliency, strength and tenacity of the small-business community despite external challenges, such as economic uncertainty. As a bank, we’re eager to help small business owners sustain their positive positioning in the market, leading to further innovation and growth nationwide.”
Uncertain economic conditions complicate trajectory to growth
Small business owners’ overall attitude of resilience prevails, even as 60% identify ongoing economic uncertainty as standing between them and achieving their goals — up 9% from 2022. Inflation is another perceived challenge, with 54% citing it as a concern that could hinder growth, while 30% also reported changes in consumer behavior as a trend impacting their business performance — which is a 7% year-over-year increase.
Lingering pandemic-related issues show decline
Just 20% of business owners say that lingering pandemic-related issues pose a challenge for their businesses, which is a significant 19% decrease from last year.
Business performance remains stable
More than two-thirds (68%) of small business owners say they’ve seen success, which is on par with data collected in 2022. However, the small business community has yet to return to pre-pandemic levels of satisfaction, when 76% of owners in 2019 stated they’d enjoyed a successful year.
- Perception of success is highest among businesses with 11-50 and 51-plus employees, with close to 100% of respondents indicating success in the last year. This is a stark contrast to the 60% of businesses with 10 or fewer employees sharing feelings of success in the past 12 months. Also, business owners in skilled trades (80%) are more likely to claim success in 2023.
- Confidence in the near-term economy remains low across all states surveyed. South Carolina and Wisconsin have both seen a 26% decrease in near-term economic confidence since 2021, with just 39% of the former and 30% of the latter feeling hopeful. Arizona expressed the lowest degree of confidence in near-term conditions at 26%.
- Long-term economic confidence continues to be muted among small business owners. After plummeting in 2021 and 2022 by 14%, confidence in the long-term economy has remained relatively stagnant. Forty-eight percent of total respondents indicated hope for economic conditions in the next 2-3 years, down 20% since 2019.
- Confidence in business growth declines with the age of respondents. Some 63% of owners over 55 years old are confident in their business’ growth for 2023 – an 8% decrease from 2022, and a stark contrast to the 92% of those aged 18-24 who report confidence.
- Business owners are less concerned about global conflict (24%, down 10% from 2022) and federal tax law changes (23%, down 4% from 2022) impeding growth in 2023. Rather, they identify inflation (54%, up 3% since last year) and unpredictable market conditions (34%, up 1% year-over-year) as the primary areas of concern.
The First Citizens Bank Small Business Forecast is conducted annually to assess the motivations, sentiments and successes of small business owners across the United States. This year, the bank expanded its Small Business Forecast from five to 10 states as it continues to grow. In previous years, the survey included responses from small business owners in California, Florida, North Carolina, South Carolina and Wisconsin. The 2023 survey adds sentiment from owners in Arizona, Colorado, Georgia, Texas and Virginia.