Small Business Owners Brace for the Impact of a Changing Economy

Running a small business is no easy feat: it takes a lot of hard work, dedication and grit, plus a bit of good luck. But no matter how hard business owners work to realize their dreams, there will always be forces outside of their control that can have a major impact on their success. And there's no greater force than that of the economy: a downturn, correction or recession can have ripple effects from Wall Street to Main Street.

Recent fluctuations in the stock market have many business owners worried. Half (49 percent) of business owners are concerned that a recession may impact the overall success of their company in the next 12 months, with women and Millennials more likely to be concerned than other business owners.

Many business owners say the recent market volatility is already impacting their business: 49 percent are or will be more conservative when it comes to inventory or supply management, and 35 percent say it has or might cause a decrease in sales. Thirty-four percent of business owners report that market volatility has or might impact their ability to expand and grow their business, while 27 percent say they are not or may not be able to hire new employees. And while they struggle to expand their team, they may face retention challenges as  23 percent say they will not be able to provide bonuses or increase in pay to employees.

Beyond concerns about a recession, some business owners are also worried about tariffs and trade wars: more than a third (35 percent) expect them to have a negative impact on their business. Millennial business owners are most likely to say that trade wars and tariffs will have a negative impact (56 percent) compared to 42 percent of GenX, 29 percent of Baby Boomers and 11 percent of Mature business owners. Millennials are defined as business owners between the ages of 21-38, Gen X are 39-54 years old, Baby Boomers are 55-73 years old and Mature business owners are 74 and older.

Despite these concerns, many small business owners remain optimistic: Two-thirds (66 percent) say fluctuations in the stock market have not changed their business outlook, and 59 percent of small business owners say business conditions are good or excellent. 

 "Small business owners remain cautiously optimistic," said Jenn Flynn, head of small business bank at Capital One. "While we saw a slight dip in optimism compared to Fall 2018, small business owners are still making strategic investments in their businesses, while paying close attention to the uncertainty in the stock market and evaluating the potential impact of a recession."

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