According to Alignable’s 2023 Road to Recovery Report, 61 percent of small businesses feel that 2023 should be a good year for them, despite high inflation, rising interest rates, fears of recession, increasing rents and other potential financial obstacles. Of that group, 26 percent said 2023 could be “great,” helping them expand and thrive.
A few key statistics:
- 56 percent say they’re more optimistic about their business success now than in January 2022.
- While inflation is still the number one concern among small businesses surveyed, the percentage of those worried about it has declined from 32 percent to 30 percent in the past month. Those saying they don’t have any major financial concerns jumped to 20 percent in January, up five percentage points from 15 percent in December.
- The cost of supplies has also declined. In December, 40 percent of those surveyed told us supplies were 25 percent or higher compared to pre-COVID prices. However, the number of small businesses that continue to see higher supply prices has dropped to 34 percent this month.
- While 45 percent of small business owners surveyed said customer counts are up for them, only 38 percent said they’re generating as much revenue monthly as they did prior
- to COVID.
- Business owners estimate it will take at least until Q1 2024 for most small businesses to fully recover to pre-COVID revenue levels.
- And while optimism is higher than usual right now, 56 percent also say they fear a recession could hit this year, which would bring more economic trouble.
The COVID Factor
While we might not be done with COVID, for small businesses this year feels like there will be less of an impact on business. We didn’t suffer a COVID-induced surge in financial stress in Q4 2022, for example.
As a result, those businesses facing the greatest continued impact have seen a 63 percent decline from a year ago with now only 12 percent of businesses reporting a significant financial impact (vs. 33 percent a year prior).
While the impact of COVID started to decline significantly in early 2022, financial recovery was hampered by inflation, rising prices and the inability of business owners to raise their prices while trying to bring their customers back.
Optimistic Sentiment Toward 2023
With what appears to be some additional stability comes hope for a year of continued recovery. According to the survey, 61 percent of small business owners are feeling good about their prospects in the coming year — and more than one-quarter of them said they expect 2023 to be “great” for their businesses. Compared to last year’s outlook, 56 percent of businesses were more optimistic heading into 2023 than they were a year prior.
The State of the Economy
Businesses Open: The percentage of small businesses that are fully reopened has surpassed an 80 percent milestone this year, according the survey. There has been a steady climb in businesses reporting being fully reopened during 2022, and it’s super encouraging to see this number climb to 82 percent.
Returning Customers: The COVID crisis caused a significant shift in purchasing behavior away from locally owned businesses. Changing purchasing behavior takes time. While there is still some room for improvement, the past quarter saw a shift in the right direction with almost 45 percent of businesses reporting customers returning at or above pre-COVID levels.
Revenue Expectations: Historically, top-line revenue growth has lagged behind the percentage of customers returning, and that trend continues in the latest data. Even at the highest level, while almost 45 percent have reported customers returning, less than 40 percent have reported that resulting in revenues on par with pre-COVID levels.
Inflation: Currently, inflation is still listed as the number one obstacle to financial recovery by the business owners in our survey. While they’ve worked diligently to bring customers back, increases in the costs of raw materials, supplies, labor and rent have created
challenges.
This latest Alignable report is based on responses from 5,703 randomly selected small business owners polled from 12/31/22 to 1/19/23, along with past data gathered from 690,000 other small business owners since March 2020.
For more information, visit alignable.com/forum/alignable-road-to-recovery-report-q4-2022
