Small Business Owner Survey: Inflation and the State of the Economic Climate - National Business Capital


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Small Business Owner Survey: Inflation and the State of the Economic Climate

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National Business Capital conducted a 15-question survey of over 250 U.S. business owners assessing their expectations for 2023, given the current small business and inflation trends.

We’re in a very unique market right now, with soaring inflation, the possibility of a recession, and conflict overseas all contributing to high prices and uncertainty. Many business owners, having already navigated through the challenges of the pandemic, are wondering how the US economy sliding into recession in 2023 will affect their business. They’re asking, “What are the economic predictions for 2023?” and “How likely is a recession in 2023?” to prepare themselves for what’s ahead.

Nonetheless, a majority of these same business owners plan to invest in their businesses in the coming year.

Of business owners surveyed aim to stick with their
current expansion strategy or start a new one.

Soaring costs are the most prominent challenge for businesses

The cost of products and materials are fluctuating dramatically, forcing business owners to review their prices on a regular basis.

Claim that inflation poses the
greatest risk to their organization.

Plan to raise their prices in correlation with the
increasing cost of their supplies.

Inflation isn’t just affecting business owners

Consumers feel the pressure, too. A business that raises its prices essentially shifts its financial burden to the consumer, who must change their spending habits to protect themselves from the higher costs.

Of survey respondents cited that they noticed an increase in consumers’ focus on deals, sales, and other methods of saving money. 

You’ve seen the headlines. There’s still the risk that the U.S. will fall into a recession, with some analysts arguing that we’re already in the midst of one. Of those surveyed:

Of those surveyed plan to either increase their marketing budget or keep it stagnant throughout the first half of 2023. The outstanding percentage plans to decrease their budget to offset inflationary pressures. On a similar note:

Of business owners intend on trying a new marketing campaign during this time.

Plan to stick with what they’re doing.

The bottom line?

Everything costs more, and there’s almost no way around it unless you have price-locked contracts. More than half (56%) of business owners plan to leverage financing to help them meet their goals in 2023, with the rest stating that it’s too difficult to secure capital with the FED’s current prime rate—7.00% at the time of publication.

Our respondents had conflicting opinions about their biggest hurdle in securing financing. Here’s a breakdown of their responses:

Finding a resource
that “gets” your
business and
to find the
right option

Banks have
their lending

An impersonal
approach to banking,
where they let an
algorithm decide
the outcome of
your application

The amount
of paperwork

Credit score

You need to protect your small business during inflation cycles, of course, but that doesn’t mean you should forgo your growth. Despite the challenges, there’s never been a better time to access capital for your business. Although banks have tightened their lending, alternative lenders are picking up the slack, providing an avenue for entrepreneurs to continue their growth throughout 2023. If you plan on securing capital at any point in 2023, it’s best to do so now, as we could find ourselves in much murkier waters in a few months.

Analysts can’t agree whether a recession is expected in Q1 2023 or not, so what are the economic predictions for 2023 as a whole? All the signs point to more of the same, but proactive steps today can mean security tomorrow. You don’t want to be playing catch-up while your competitors leverage their financing relationships to grow in 2023. With National, you can stay one step ahead of the curve and, most importantly, position yourself to come out on the other side of this economically-constricting tunnel on top.

We don’t call our Business Finance Advisors “experts” for no reason, either. We’ve been in business since 2007, worked with almost every industry, and learned a lot along the way. In other words, our team “gets” your business, and we’re uniquely capable of streamlining the process to connect you with your funds as soon as possible.

There’s no one-size-fits-all approach to financing—you can trust us to find a personalized solution that will help you grow without restraint. Complete our digital application, securely upload your business documents, and our team will reach out to you within minutes.


How Does Inflation Affect a Small Business?

Inflation describes the increase of prices over a period of time. As prices increase, the purchasing power of a dollar decreases, which limits both consumer and business spending substantially. For businesses, inflated costs decrease your profit margin if you’re operating on the same pricing model. For example, a sale that used to net your business $50 may only yield a $35 profit during periods of high inflation, which decreases your overall revenue.

What Businesses Do Well in Inflation?

According to Warren Buffet, the best type of business to own during periods of high inflation are those that don’t require routine capital investments. However, it’s important to view this situation from a more macro perspective. As the value of the dollar drops, consumers tend to tighten their budgets and use their diminished purchasing power only for necessary items, like food, energy, and healthcare. These businesses stand strongest during inflationary periods because they don’t lose their customers to a “spend less” ideology.

Tech companies and other non-essential products and services are usually hit the hardest by a recession or high inflation. But, if you’re one of these companies, the decreased value of the dollar doesn’t have to be the reason you close your doors for good—especially when you have a powerful ally like National Business Capital in your corner.

How to Survive Recession Economies and Periods of High Inflation as a Small Business Owner?

Any business that relies on commodities or materials should evaluate its pricing model on a consistent basis. You might not want to raise prices to retain customers, but most are expecting it already. If you’re worried about how your customers will respond to a price hike, you can always ask them. Whether through a formal survey or word of mouth, their opinions are vital to the success and longevity of your operation, so make sure not to neglect them.

It’s important to be financially prepared for an economic downturn, but it’s almost more important to be mentally ready for what’s around the corner. Fear can force you to cut back when you really don’t have to, so take yourself out of the headlines and put yourself into your operation. What’s working for you, and what’s not? By taking stock of your successes and failures consistently, you’ll have a much better understanding of your business as a whole and, more importantly, the strategies that are generating profit.

No one knows what’s ahead, but it’s best to be prepared. If you’re planning to secure financing at any point in 2023, you should do so sooner rather than later to avoid paying more than you have to in interest.

National Business Capital is the #1 FinTech marketplace offering small business loans and services. Harnessing the power of smart technology and even smarter people, we’ve streamlined the approval process to secure over $1 billion in financing for small business owners to date.

Our expert Business Financing Advisors work within our 75+ Lender Marketplace in real time to give you easy access to the best low-interest SBA loans, short and long-term loans and business lines of credit, as well as a full suite of revenue-driving business services.

We strengthen local communities one small business loan at a time. For every deal we fund, we donate 10 meals to Feeding America!