SMBs Optimistic Despite Tough Economy

Most small and midsize companies feel much better about their own finances than the U.S. economy, according to a recent Nationwide survey of 800 businesses.

More than three out of five small companies and 51% of mid-market companies rate the economy as either ‘poor’ or ‘fair’, while at the same time, 51% of small market companies and 73% of mid-market companies rate their own businesses as either ‘good’ or ‘excellent,’ according to the data.

“Business owners are more optimistic the closer you get to their specific region, industry or business,” Kristina Talkowski, Nationwide’s senior vice president and head of middle market commercial lines said. “This optimism ultimately aligns with economic indicators showing a resilient economy, but also reflects continued challenges with high interest rates, material, and labor costs.”

She added that it’s clear business owners face challenges, “but they’re resigned to these challenges and proactively taking steps to improve their operational strengths and resiliency. I think this preparation has contributed to owners’ optimistic views of their own business conditions, as most feel ready to weather a major disruption in the future or even expand their operations.”

Despite remaining upbeat about their own businesses, both small and middle-market companies face a series of internal challenges including benefits for workers, optimizing operations, and expenses, according to the survey.

“Health insurance and possibly voluntary benefits like pet insurance certainly play a role in attracting and retaining talent,” Talkowski said.

“As business owners face these internal and external pressures, it’s no surprise that they’re looking to optimize costs, with many looking at their insurance as a place to save, while agents and carriers can help ensure business owners don’t sacrifice long-term protections for short-term savings,” she adds.

The survey showed 34% of small market companies and 39% of mid-market companies say their employees want better compensation, while 25% of the smaller businesses and 40% of the bigger businesses say their employees want better benefits too.

Meanwhile, 83% of small market companies and 77% of mid-market companies reviewed their commercial insurance policies online or with their agent in the past six months, according to the survey, with more than one-third of mid-market owners discarding a policy or lowering their coverage limits during the timeframe.

Talkowski also pointed to generative AI as another evolving need and challenge facing the workforce.

“It’s important for employers to have policies in place to govern the use of ChatGPT and other AI tools to ensure the security of their business data and processes,” she said. “For workers, there may be benefits like increased efficiency, as well as downsides with 43% worried about AI’s impact to their job security.”

While most companies have invested into AI, the survey showed mid-market companies are ‘more likely’ investing today.

According to the data, just 27% of small businesses have invested into AI, while 63% of middle-market businesses have put dollars into the technology.