KeyBank Survey Finds Business Owners Maintain Confidence Amid Election Uncertainty and Potential Policy Changes

Rhea-AI Summary

KeyBank's Fall 2024 Small Business Flash Poll reveals 61% of small business owners plan to delay major decisions until after the election. Despite concerns about potential policy changes, particularly in taxation (45%), regulation (34%), and trade (31%), business owners remain resilient. They're adapting by increasing cash reserves (38%), delaying investments (36%), and diversifying offerings (31%).

The survey highlights challenges from high interest rates, including reduced profit margins and increased borrowing costs. However, 72% of owners are confident in funding monthly operations, up from 64% in March. Fraud prevention remains a priority, with payment fraud (49%) and identity theft (29%) as top concerns.

Women business owners show more uncertainty but are taking proactive measures like adjusting pricing strategies. Despite challenges, 75% of small business owners don't foresee hiring cuts, with 32% expecting to grow their staff in the next year.

While election uncertainty stalls business decisions, small business owners remain resilient for the year ahead.

CLEVELAND, Sept. 17, 2024 /PRNewswire/ -- Election years often bring heightened uncertainty for business owners, who must navigate potential policy shifts that could significantly impact their operations. KeyBank's Fall 2024 Small Business Flash Poll found that more than three in five (61%) small business owners polled plan to delay making major business decisions until after election results come out, underscoring the significant impact the political environment can have on business strategy.

As the political landscape evolves, many are anticipating new regulations, tax changes, and trade policies that could impact their business futures. Nearly half (45%) of small business owners surveyed anticipate changes in taxation will have the most significant impact on their businesses—up from 38% in KeyBank's March 2024 Small Business Survey—with further concerns about the regulatory environment (34%) and trade policies (31%).

Despite these concerns, small business owners remain resilient, adjusting their business strategies to navigate potential policy shifts that could impact their operations. The most common strategies include increasing cash reserves (38%), delaying major investments or expansions (36%), and diversifying product or service offerings (31%). As one of the top indicators of the greater economic environment in the US, business owners' financial resilience could signal improving economic conditions while financial challenges persist.

"The upcoming election adds uncertainty to an already volatile economic landscape; yet, small business owners continue to demonstrate exceptional adaptability," said Mike Walters, President of Business Banking at KeyBank. "Their strategic approach to navigating inflation pressures, managing cash flow challenges, and addressing evolving market demands showcases a robust entrepreneurial spirit. This resilience not only positions them to withstand current market fluctuations, but also persevere through potential policy shifts, regardless of election outcomes."

High Interest Rates Lead to Increased Challenges

Small business owners say they have faced reduced profit margins (38%), increased borrowing costs (37%), and deferred capital investment (31%) due to high interest rates. The survey also found that small business owners are anticipating a rate cut, with more than half (56%) expecting interest rate changes to positively impact their business in the next 12 months. For now, small businesses are adapting to interest rates by increasing cash reserves (43%), reducing reliance on debt (36%), and diversifying funding sources (32%).

Despite steadily high interest rates, actions small business owners are taking now to adjust may be leading to increased confidence and stability. Roughly three in four small business owner respondents (72%) are confident that they could fund their operating expenses for a month, up from 64% in March, just six months prior. Another sign of stability, the majority of small business owners (75%) do not foresee hiring cuts over the next year. In fact, one in three (32%) small business owners expect to grow their staff in the next 12 months. 

Fraud Prevention Remains a Priority for Business Owners

As business operations are becoming increasingly digitalized, small business owners continue to express concerns about payment fraud, identity theft and phishing and email scams. Payment fraud (49%) and identity theft (29%) continue to be top fraud concerns, aligning with data from the March 2024 Small Business Survey (44% and 37%, respectively). These ongoing concerns highlight the need for vigilance and effective fraud prevention strategies to protect business operations.

Implementing effective measures against fraud presents significant challenges for business owners. The primary obstacles include the high cost of implementation (47%), a lack of technical expertise (42%), and time constraints (39%), underscoring the complexities and resources necessary to establish robust fraud prevention systems. Learn more about advice KeyBank provides to business owners about business security and risk management.

Women Business Owners Taking Proactive Measures Amid Economic Uncertainty

While overall financial confidence has risen since March, women business owners are generally more uncertain than male business owners about navigating economic challenges and potential policy changes. A quarter (23%) of women are unsure about their ability to cover operating expenses for a month, compared to 15% of their male business owners.

Despite facing unique challenges, women business owners are demonstrating resilience and adaptability in navigating economic shifts. While 41% of women business owners expect interest rate changes to positively impact their businesses in the next 12 months (compared to 67% of their male counterparts), they are taking strategic steps to safeguard their operations. Notably, women are more likely to adjust pricing strategies (27%) in response to heightened uncertainty, underscoring a focus on optimizing financial outcomes, while men are more inclined to diversify their offerings (35%).

Methodology

This survey was conducted online by Survey Monkey, including 1,796 respondents, ages 18-99, located in the United States, who own or operate a small-to-medium size business with an annual gross revenue of less than $10 million, completed the survey in August 2024.

ABOUT KEYBANK

KeyBank's roots trace back nearly 200 years to Albany, New York. Headquartered in Cleveland, Ohio, KeyCorp (NYSE: KEY) is one of the nation's largest bank-based financial services companies, with assets of approximately $187 billion at June 30, 2024. 

Key provides deposit, lending, cash management, and investment services to individuals and businesses in 15 states under the name KeyBank National Association through a network of approximately 1,000 branches and approximately 1,200 ATMs. Key also provides a broad range of sophisticated corporate and investment banking products, such as merger and acquisition advice, public and private debt and equity, syndications and derivatives to middle market companies in selected industries throughout the United States under the KeyBanc Capital Markets trade name. For more information, visit https://www.key.com/. KeyBank Member FDIC. 

CFMA #240912-2778328

This material is presented for informational purposes only and should not be construed as individual tax or financial advice. KeyBank does not provide legal advice. Key.com is a federally registered service mark of KeyCorp. ©2024 KeyCorp

 

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SOURCE KeyBank

FAQ

How are small business owners responding to election uncertainty according to KeyBank's 2024 survey?

According to KeyBank's Fall 2024 Small Business Flash Poll, 61% of small business owners plan to delay major business decisions until after the election results. They're adapting to potential policy shifts by increasing cash reserves (38%), delaying major investments or expansions (36%), and diversifying product or service offerings (31%).

What are the main concerns of small business owners regarding potential policy changes after the 2024 election?

The survey shows that small business owners are most concerned about changes in taxation (45%), the regulatory environment (34%), and trade policies (31%). These potential policy shifts are anticipated to have significant impacts on their businesses following the 2024 election.

How has small business owners' confidence in funding operations changed since March 2024, according to KeyBank (KEY)?

KeyBank's survey indicates that small business owners' confidence in funding operations has increased. In Fall 2024, 72% of respondents were confident they could fund their operating expenses for a month, up from 64% in March 2024, showing improved financial stability.

What are the top fraud concerns for small business owners in 2024, based on KeyBank's survey?

According to KeyBank's Fall 2024 Small Business Flash Poll, the top fraud concerns for small business owners are payment fraud (49%) and identity theft (29%). These concerns highlight the need for effective fraud prevention strategies in increasingly digitalized business operations.

How do women business owners differ in their approach to economic uncertainty compared to male owners, as per KeyBank's 2024 survey?

KeyBank's survey shows that women business owners are generally more uncertain about economic challenges. However, they're demonstrating resilience by taking proactive measures. Women are more likely to adjust pricing strategies (27%) in response to uncertainty, while men are more inclined to diversify their offerings (35%).