Small business spending trends are shifting as owners look ahead to the coming months, driven by a new sense of optimism in their financial decisions. According to the latest PNC Economic Survey, entrepreneurs are feeling more confident about their business prospects than they have in years, leading to increased spending and strategic investments.
Growing Confidence in Business Prospects
The survey reveals that 37% of business owners are optimistic about their company’s future over the next six months—a significant rise from 22% last fall. This growing confidence translates into an expectation of increased revenue, with 55% of small businesses anticipating higher sales, while 41% predict rising profits. On the flip side, only 12% of entrepreneurs express pessimism, marking the lowest level of concern since 2007.
Economic Optimism at an All-Time High
Beyond their own businesses, small business owners are also more positive about the broader U.S. economy. Nearly 80% report feeling moderately or greatly optimistic—a stark contrast to the uncertainty that prevailed during the Great Recession. This overall economic confidence is fueling investment in hiring, wages, and price adjustments.
Where Are Small Businesses Investing?
With a brighter outlook, business owners are making critical financial moves to drive growth. Key areas of investment include:
1. Hiring More Employees
One of the most notable trends is the increase in hiring plans. 22% of small businesses intend to bring on new employees in the next six months—up from 16% last fall. If you’ve been considering expanding your team, now may be the right time to evaluate your staffing needs.
2. Raising Wages
With a competitive labor market, 32% of small businesses plan to raise wages for their employees. This means businesses looking to attract and retain top talent will need to consider compensation strategies carefully. Additionally, 70% of businesses say they wouldn’t be significantly affected by a federal minimum wage increase, indicating strong financial positioning.
3. Managing Cash Flow and Pricing
Although entrepreneurs are feeling more secure, they remain cautious with borrowing. Only 15% plan to take out a loan or line of credit in the next six months, even though access to credit is improving. Instead, many businesses are looking to raise prices, with 40% planning price increases to boost cash flow and sustain growth.
What Does This Mean for Your Small Business?
If you’re a small business owner, now is the time to align your strategies with these trends:
- Assess your hiring needs: With more companies hiring, securing top talent early can give you a competitive edge.
- Retain your best employees: As the job market improves, your employees may explore other opportunities. Consider offering incentives, career growth opportunities, and a strong workplace culture to keep them engaged.
- Compete for talent effectively: Emphasize your company’s unique benefits, such as a supportive work environment, flexible schedules, or opportunities for professional development.
- Evaluate your pricing strategy: If you plan to raise prices, ensure your value proposition is strong enough to maintain customer loyalty.
Conclusion
The improving economy presents an exciting opportunity for small businesses to expand, invest in their workforce, and optimize operations for growth. By taking proactive steps now, your business can position itself for long-term success in an increasingly dynamic marketplace.