Small businesses with less than 10 employees hold gloomier outlooks on their potential future growth and hiring prospects and were less likely to see potential benefits from artificial intelligence compared to the largest small businesses with 101-500 employees, according to an American Express survey of 550 U.S. small businesses conducted in late March.
While 54% of small businesses overall stated they were confident in their own ability to make good decisions about growing their businesses, only 29% of the smallest companies said they were confident compared to 64% of those with the most workers, the survey found. The report also found that just over half (51%) of small businesses said they are currently hiring workers with the largest ones more likely to be hiring (89%) compared to just 20% of the smallest businesses.
Given that small business owners are typically optimistic, Brett Sussman, vice president of American Express Business Blueprint, said he was somewhat surprised by some of the findings in the study, the first of an anticipated ongoing series of surveys that Amex expects to pursue tracking confidence levels. “It really says to me that approximately half of small business owners are not feeling confident in this environment,” Sussman said in an interview.
Sussman attributed a tightening credit environment and inflationary concerns to the fact that 41% of small businesses said they often or always turn down business opportunities because they are uncertain about their cash flow. “They’re declining growth opportunities because they don’t have as good a feel on their cash flow,” he said.
The survey’s findings largely dovetail with a number of recent reports that have shown flagging confidence in a number of corners of the economy even as the labor market has held fairly strong.
For instance, finance chiefs are lowering growth expectations and are under pressure from their CEOs to cut costs, according to a recent CFO Dive report on the Q2 2023 CFO Signals Survey released by Big Four accounting firm Deloitte Thursday. Meanwhile, the Conference Board said consumer confidence fell in May to the lowest level in six months and in April the National Federation of Independent Business said confidence among small businesses slumped to a decade low, CFO Dive previously reported.
In addition to business confidence, the Amex study will drill down periodically on issues that are top of mind for businesses. For instance, it found that less than half or 41% of businesses are now prioritizing AI to make business decisions with only 16% of the smallest businesses saying they see potential benefits in AI compared to 75% of the largest businesses.