Despite an uncertain economy and the toll of inflation, small businesses are growing their revenue, expanding their brand, and prioritizing their customers.
Kabbage from American Express’ September 2022 installment of Small Business Recovery Report, which polls 550 small-business leaders and tracks the recovery trends and growth outlook of U.S. small businesses, presented some surprising and encouraging findings.
The report reveals that respondents nearly doubled revenue year-over-year between July 2021 and July 2022 while profits remained flat amidst economic hurdles such as inflation and supply chain disruptions.
In the previous version of the Small Business Recovery report, from June 2022, 80% of respondents said they were confident they could withstand a potential U.S. recession. The data from the latest report helps illustrate why small-business owners (SBOs) are so optimistic. Cross-analyzing the survey results between July 2021 and July 2022, the data shows U.S. small-businesses revenues have increased on average by 87%.
This trend is on point for Stefan Kalb, CEO of Shelf Engine, a grocery store forecasting business that results in more products on the shelves and less spoilage. “We’re one of the few fortunate businesses that prospers amidst economic challenges, as they create more demand for our solutions,” he says. “The grocery industry operates on razor-thin margins and needs every tool at its disposal to cut costs. That’s especially true now, as rising inflation means consumers are carefully watching every dollar they spend.”
Managing Revenue When Costs Are High
Not every business is in as good a position as Shelf Engine, however. While overall profits among U.S. small businesses have slightly declined four percent, 75% of respondents report feeling impacted by inflationary pressures and 56% of respondents expect economic pressures to last through summer 2023. SBOs are doing their best to manage increasing costs.
Kristina Schlegel, CEO and founder of California-based food crafting company Make Bake, has noticed these trends in her own business. “We’ve definitely seen our revenue grow as we’ve expanded our wholesale business from 50 to nearly 200 retailers in the last 12 months,” she says. “But inflation in our supply chain has certainly cut into those profits. As a business, we’re also in that ‘messy middle’ – incurring more costs in product development, marketing, and trade shows to get to the next level as a brand. And it’s challenging to be in a growth phase of your business while your costs are rising so quickly.”
For the rest of the piece and the research report, check out the AMEX Business' website.