12% of SMBs Concerned They Won’t Survive Past 2024

There’s an oft-repeated quip in business circles that says, “If you’ve managed to survive this long, you’re probably going to last.” 

While more than half of small and medium-sized businesses (SMBs) surveyed for the most recent edition of PYMNTS’ Main Street Health report confidently said they expected to see full-year revenues up for 2022, a strikingly large proportion — 12% to be exact — said they were less sure about their chances of surviving into 2024. 

Read the report: Inflation Takes Mixed Toll on Main Street Small Business 

After more than two years of COVID-19 chaos followed by another 10 months (and counting) of rampant inflation, rising interest rates and economic uncertainty, the totality of the headwinds is strong enough to give many of these so-called SMB survivors second thoughts. 

While this has negatively impacted the outlook for some SMBs, it has also created an opportunity for some financial institutions to supply capital and cash flow assistance or payment solutions that can reduce costs and help stressed out companies buy time. 

Expectations for the Future 

In light of the continued calamities that have befallen SMBs in the past few years, 56% of businesses expect revenues to increase in 2022, down from 64% who said the same thing late last year, in what was thought at the time to be the waning days of the pandemic. 

Expectations were not uniform across sectors. The report has found that just 50% of personal and consumer services Main Street SMBs expected growth in 2022. Meanwhile, retailers were more optimistic, with 64% saying that they expect growth throughout the year.

Inflation Trumps All Concerns

At the same time, while there are still plenty of things for Main Street businesses to worry about, the most prevalent concern that keeps business owners up at night is inflation, with 37% of business owners citing it as their biggest worry in response to the July survey. That is a significant jump from the beginning of this year, when inflation was the biggest concern for just 23% of respondents.

That factor has presented numerous challenges for businesses, who have been forced to find new efficiencies in areas such as payments, borrowing and settlement terms, spend management, automated AR/AP and more B2B functions that not long ago were often seen as inconsequential or not with pursuing. 

This at a time when PYMNTS survey of 446 businesses in July saw 7 out of 10 reporting that supplier costs have increased over the course of this year. On average, product prices increased by 11% and business costs rose by 12%. Just 50% of businesses surveyed have increased the wages of their workers. 

Uncertainty about economic conditions was the primary concern for 20% of businesses, while pandemic-related issues were top of mind for just 10% of the respondents in July. 

What’s Going On With the Bottom Line

Inflation has driven many Main Street businesses to increase prices, but still many have seen a decline in profits. The majority of businesses said in July that they have increased prices in the last 12 months (61%). 

Construction and utilities businesses were the most likely to push some of the inflationary burden onto their customers, with 68% of businesses increasing prices. But they were also the most likely to see supplier cost increases, with almost 4 in 5 businesses reporting a price increase. 

The July survey found that 57% of businesses are making less profit than they were 12 months prior.

See also: FinTechs Target ‘Zombie Spending’ That Eats 4% of Revenue

Another growth opportunity born of distress is the current increased uptake of procurement management solutions that offer businesses a way to reduce costs by implementing more efficient ways to purchase supplies. 

Recent PYMNTS data found that as much as 4% of average company’s revenue was spent on zombie revenue consisting of non-payroll spending that occurs before it can be approved or corrected as well as other inefficiencies.