Eyal Lifshitz is CEO of Bluevine, a leading provider of small-business banking.
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Despite continued inflation and a persistent high interest rate environment, economists are no longer predicting a full-blown recession this year. In fact, more than three-quarters of economists surveyed by the National Association for Business Economics expect the U.S. economy is heading for a “soft landing” in 2024. As a general statement, that’s good news—but what does it mean for small-business owners across America, and are they right to be optimistic about their prospects for growth?
Faced with economic uncertainty for the better part of 2023, the small-business sector was hyper-focused on finding efficiencies and planning for the challenging year ahead. Now, several months into 2024, as consumer spending remains strong and unemployment continues to be low, things are looking up. And, with tighter efficiencies set up last year, small and medium-sized businesses are poised to get even more from each dollar they invest in growth in 2024—making this year a potential force multiplier for growth, for those business owners who play their cards right.
Certainly, there are good reasons to be optimistic about growth this year, grounded in economic and market pulse data. Small-business sentiment surveys from Goldman Sachs and our company reported that a majority of small businesses expect to achieve greater levels of growth in 2024 than in 2023. Three-quarters of those surveyed in the Goldman Sachs 10,000 Small Business Voices survey said they were optimistic about their financial trajectory as a company in 2024, and 62% expect to increase profits.
Similarly, a Slack Small Business Outlook survey found that 71% of small businesses were feeling confident about the state of their business in 2024 after a year of focused improvements. And our company’s Business Owner Success Survey Report (aka, The BOSS Report) revealed that 22% of U.S.-based small businesses project revenue gains of 50% or more, nearly doubling the 12% of companies that reported growing revenue at or above 50% in 2023.
But as any business owner is well aware, it is one thing to plan for success and another to achieve it. It’s all about the execution. As they prepare for growth in the year ahead, there are a few things small businesses can consider to increase their chances of a banner year.
Secure Credit
For small-business owners, cash flow is king. Generally, there is a lot less wiggle room financially, as small businesses don’t have the luxury of operating with massive balance sheets like their large corporate counterparts. Expanding access to capital with a new line of credit or credit card, even for short-term needs to bridge a gap in cash flow, can provide effective cash flow buffers to mitigate late invoice payments or delayed contracts—which can help owners stay the course and maintain business momentum.
While there is generally more aversion to taking on more debt in periods of volatility, a flat or declining interest rate environment could make for a good time to activate new forms of credit.
Create Jobs, But Take It Slow
Revenue growth and job creation often go hand in hand, especially for small businesses. Survey data from the BOSS Report indicated that 67% of small businesses plan on making new hires in 2024, following a year where 75% finished with the same or fewer employees than when they started. For SMBs, hiring is already hard enough, but timing it at the precise moment of need makes it even more challenging. As businesses plan for growth by expanding their products or services, they will need the proper staffing to design, build, market, sell and support those offerings.
Small businesses—by necessity—rarely run with excess overhead and are naturally more efficient than large enterprises, even when economic conditions are positive. This efficiency and tight resourcing usually come at a price amid scaling—namely, the small-business owner’s time. As tempting as it may be to post a new opening for a role that could alleviate a sudden increase in workload, small-business owners have to be strategic and ensure that any hiring aligns with the broader financial plan.
Choose A Banking Partner That Can Go And Grow With You
Small-business owners want to run their businesses their way, aligning with their working style as much as their lifestyle, and generally prefer to have a degree of freedom and flexibility—which is often why they hung their own shingle in the first place.
While many small businesses still often resort to local branch banking, these in-person banking services are eating up a large portion of owners’ time. In fact, 34% surveyed in the BOSS Report say they spend at least five hours per month on banking activities at their branch, including travel time, which equals seven and a half working days per year.
Technology has leveled the banking playing field. What once required in-person, on-site interaction can now be easily accomplished digitally, and with the same security, privacy and peace of mind owners rely on from their banking partner. This now applies to everything from opening an account, to making large transfers and deposits, to adding account access controls to employees.
Whether it is a completely digital bank or a traditional bank with robust digital and mobile offerings, business owners are smart to find a partner that supports them however, wherever and whenever they do business.
Putting Optimism Into Action
There are many tactics SMBs can leverage to maximize growth opportunities this year—from hiring top talent, to adopting game-changing tech, sharpening business operations and expanding access to capital.
Adopting a growth-driven mindset—particularly in periods of on-and-off uncertainty—can often be half the challenge. And in that case, the numbers show that many small businesses are more than halfway there. But if this is going to be the comeback year for small businesses, it will be important to be strategic when owners are ready to put their optimism into action throughout 2024.
The information provided here is not investment, tax or financial advice. You should consult with a licensed professional for advice concerning your specific situation.
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