- U.S. small business revenues rose by 87% on average between July 2021 and July 2022, according to the Small Business Recovery report from American Express and Kabbage.
- However, profits declined by 4% during the same period. Three-fourths of respondents said inflationary pressures impacted them, and more than half (56%) expect inflation to continue to be an issue until at least the summer of 2023, the report, issued Sept. 14, revealed.
- In response to rising costs, more than a third (37%) of small business owners are raising their prices, less than one-quarter (22%) are negotiating with their suppliers, and 22% are removing lower-margin products and services. Meanwhile, one-third of small businesses said they will prioritize customer relations and enhance customer loyalty to drive revenue growth, according to the report.
This recent survey builds upon Amex’s previous research outlining how inflation is affecting small business owners. According to another survey the company released in March, 65% of small businesses planned to keep their inflation-adjusted prices for the next six months.
The September survey illustrates small business owners’ desire to harness data to reach new customers. Nearly half (47%) of survey respondents said they had increased their digital marketing spending this year. According to the report, almost one-third (31%) of respondents also said they want tools to re-examine their cash flow and spot future financial gaps.
“U.S. small businesses are adjusting to not only survive but flourish during challenging economic times,” Brett Sussman, vice president and head of sales & marketing for Kabbage, said in a statement. “Inflationary pressure and challenges with hiring and retaining talent, among other factors, are driving small businesses to fine-tune their business practices.”
A separate survey, Bank of America’s Small Business Checkpoint, determined small business owners are moving forward with “cautious optimism.” In August, small business payments per client rose 11% year-over-year and card spending per client grew 13% year-over-year; both of those figures were higher than July growth rates, that Sept. 15 report said.
As businesses have sought to bolster their employee headcounts, average overall payroll spending per client is up, too: It climbed 11% year-over-year in August on a three-month rolling average, Bank of America said.
In the small business spending space, a crop of newer fintechs aim to compete with the big banks, but the latter still dominate the market. New York-based American Express recently added to its offerings in this segment, rolling out its first debit card with a checking account for small and medium-sized businesses in October 2021 and a digital payment tool in August that lets customers make transactions domestically and abroad.