Recent surveys indicate that small business owners in the United States are maintaining a positive outlook despite ongoing economic challenges. This resilience is particularly noteworthy given that small businesses account for 99.9% of all U.S. businesses and employ 47.1% of the private workforce.
According to a survey conducted by American Express in mid-2024, 83% of small business financial decision-makers reported that recent years have demanded unprecedented creativity. Additionally, 87% expressed growing confidence in their business management skills year over year. These findings suggest that the challenges faced by small businesses have fostered innovation and adaptability.
Gina Taylor Cotter, executive vice president and general manager of American Express' small business products, stated:
This positive sentiment is further supported by the National Federation of Independent Business (NFIB) Small Business Optimism Index, which rose 2.2 points to 93.7 in July 2024. This marks the highest reading since February 2022, reflecting a gradual improvement in small business sentiment. However, it's important to note that this figure remains below the 50-year average of 98 for the 31st consecutive month.
Despite the overall optimism, small business owners continue to face significant challenges. Inflation remains the primary concern, with 25% of respondents identifying it as the most critical issue affecting their operations. Bill Dunkelberg, NFIB Chief Economist, emphasized that cost pressures, particularly labor costs, continue to impact small businesses' profitability.
The resilience of small business owners is particularly impressive considering that about 20% of small businesses fail within the first year, and the average small business startup costs around $30,000. These entrepreneurs, with an average age of 50.3 years, often work long hours, with approximately 15% putting in more than 60 hours per week.
The diversity of the small business landscape is noteworthy, with women owning about 40% of U.S. small businesses and minority-owned businesses accounting for approximately 18%. This diversity contributes to the sector's overall economic impact, as small businesses generate 44% of U.S. economic activity.
While challenges persist, the creativity and adaptability demonstrated by small business owners bode well for their continued success. As they navigate inflation and labor cost pressures, their optimism and resilience remain key factors in driving economic growth and innovation across various industries, from healthcare to construction.