First Citizens Bank Forecast Shows Pandemic Rebound on Small Business Success
The majority of small business owners recorded feeling more successful in the past year following a rebound from the ongoing global pandemic, according to a new survey.
The eighth annual First Citizens Bank Small Business Forecast found more than two-thirds (67%) of owners described their business as being successful in the past year, which is an 8% year-over-year increase. The factors contributing to businesses success include COVID-19's impact on increasing demand for certain types of products and services (33%), fewer competitors (28%), increasing consumer comfort with technology (25%) and an increased desire to "buy American" (23%).
Of the states in which the survey was conducted, Florida had the highest increase in perception of success in the last 12 months. Floridians recorded a 25% increase since 2021 with 79% claiming a positive year in 2022.
"Running a small business can be an adventure. The last several years have compounded the difficulty with new challenges, but we've also seen new opportunities arise," said Doug Sprecher, executive director of Sales Strategy at First Citizens Bank. "While there are many factors that will continue to create uncertainty for small business owners, they're focused on controlling what they can and using their business aptitude to guide them through this next chapter. We'll use this data to help them plan and address any headwinds they may face."
Economic Outlook Declines Significantly
Despite this encouraging data from small business owners, concerns still linger for the year ahead as the outlook on the economy has declined. Only 42% of those surveyed reported feeling confident in the economic conditions for the next 12 months, which is a 19% decrease compared to 2021. Similarly, the long-term outlook on economic conditions for the next two to three years has also significantly decreased to 49%, down from 63% in 2021.
This decline was felt across business owners in all states surveyed, with 45% of Californians (down 26%) and 43% of South Carolinians (down 22%) showcasing the steepest decline in near-term economic conditions. South Carolina business owners' sense of optimism for the economy over the course of the next two to three years also dropped significantly to 39%, which is down from 65% last year. North Carolina (45%, down 18%) and Wisconsin (43%, down 17%) ranked second and third, respectively, with declining views of the economy.
The factors driving general economic uncertainty include:
- Inflation (51%)
- Global conflict (34%)
- Unpredictable market conditions (33%)
- Ongoing pandemic concerns (30%)
Small Business Owners' Self-Confidence Remains Stable
In 2022, despite the economic outlook, 80% of business owners indicated they were confident in their businesses' growth in the next year, which is a 2% uptick from last year. Additionally, 72% said they plan to expand their business in the next six to 12 months. This is a 10% increase from the previous year.
Other Key Findings
- Despite more small businesses planning for expansions, just 35% indicated they plan to do so by securing external funding sources.
- Of those surveyed, men were more likely to report feeling successful in the past year. In the last 12 months, 71% of men (up 11%) reported feelings of success in the last 12 months compared to 63% of women (up 7%).
- While uncertainty surrounding the ongoing COVID-19 pandemic remains among the top concerns facing businesses, it has decreased from 52% in 2021 to 39% in 2022.
- Of those planning to grow or expand their business in the year ahead, the majority plan to do so through adding new products and services (45%), hiring more employees (42%) or increasing their marketing/advertising budget (40%).
- In terms of succession planning, 52% say they are confident they will be able to retire when they would like. Forty percent say they have an exit plan for their business when they retire with those plans including transitioning the business to a family member (37%), selling their business to an outside party (25%) or liquidating assets and closing their business (19%).
- Local loyalty continues to drive positive sentiment with 75% of all respondents in all five markets agreeing that the state where their business is located is a great place to start a small business. By state, the percentage of respondents agreeing their state is a great place to start a business is: Florida (85%), Wisconsin (76%), South Carolina (76%), North Carolina (75%) and California (61%).
For more information about how First Citizens can help small businesses manage their finances, visit firstcitizens.com/small-business.