How And Why Surveyed Small Business Owners Are Preparing For A Recession
Small business owners continue to worry about the onset of a recession and are taking steps to protect themselves from such a severe economic downturn.
With good reason.
“A Federal Reserve economic survey released Wednesday pointed to elevated recession fears along with a belief that soaring inflation will last at least through the end of the year,” CNBC reported.
Increased Fears
“Recession fears have grown recently as consumers battered by higher prices have slowed activity and domestic investment has cooled. The economy contracted 1.6% in the first quarter, and the Atlanta Fed has GDP on pace to decline 1.2% in the second quarter, meeting the rule-of-thumb recession definition,” according to the news organization.
Facing Difficult Headwinds
“Many small business owners face difficult headwinds as inflation and rising interest rates continue to affect entrepreneurs throughout North America,” Marwan Forzley, CEO of Veem said via email. “Almost half (49%) of the business leaders we surveyed said they are predicting a recession this year, the most surprising finding of our latest survey,” he noted.
Readying For A Recession
Veem, a payment platform company, yesterday released the results of a new survey that shows how small businesses are preparing for a recession. Their actions include:
- Scaling back expansion plans (16.7%)
- Reducing their workforce (7.2%)
- Downsizing retail or office space (5.4%)
- Cutting services (4.5%)
The survey was conducted by the payment platform Veem May 31 through June 8, 2022 via Survey Monkey. The margin of error was +4/-4%.
When asked how they would prepare for a recession, about 50% of small business owners said they would either pay down credit cards and other variable-rate debt (25.8%) or increase their savings (23.5%).
‘A Long Way to Go’
“We have a long way to go before inflation and interest rates come back down to Earth and meanwhile, many small business owners are also anticipating a recession this year,” Forzley said in a report about his company’s survey results.
“Small businesses are definitely concerned about how these conditions will continue to impact their operations. Despite these issues, we can see business owners wearing their David vs. Goliath hats, knowing that they will come out on top in the end,” he observed.
“Small companies are unquestionably worried about how these macroeconomic events will impact their bottom line, as an economic downturn could disrupt their day-to-day business, and lead to layoffs. Small business sentiment can be summarized under a heading that most believes winter is coming,” Forzley concluded.