By Casey Christopher, KeyBank Vice President, Central New York Business Banking Sales Leader
In March of 2024, KeyBank’s Small Business Flash Poll found that small business owners remained resilient despite concerns they had about the future economy. With the presidential election on the horizon, we surveyed small business owners again to gauge whether sentiment has shifted and understand how small business owners are preparing for upcoming changes in 2025.
KeyBank’s updated poll, which surveyed small business owners with an annual revenue of $10 million or less in August*, found there is increased optimism–albeit cautious–about the economy leading into the presidential election. However, many small business owners are taking a “wait and see” approach to the economy. Taxation, challenges associated with interest rates and fraud also remain top of mind.
Confidence and Financial Stability Have Increased
KeyBank’s latest Small Business Flash Poll found 72% of business owners feel confident that they could fund their operating expenses with the cash they have in reserve for one month if an unexpected need arose, up from 64% in March. The poll found another sign of stability: the majority of business owners (75%) do not foresee hiring cuts over the next year. In fact, one in three (32%) business owners expect to grow their staff in the next 12 months.
“Wait and See” Approach
Election years often bring heightened uncertainty for business owners, who must navigate potential policy shifts that could significantly impact their operations. More than three in five (61%) of surveyed business owners plan to hold off on making major business decisions until after the election results are clear, underscoring the impact political and economic uncertainty has on business strategy.
As the economic and political landscape evolves, many business owners are proactively preparing for the possibility of new regulations, tax changes, and trade policies that could shape their business futures. Nearly half (45%) of business owners anticipate that changes in taxation will have the most significant impact on their businesses. This is followed by concerns about the regulatory environment (34%) and trade policies (31%). Just 15% of business owners say they are not making any significant changes in anticipation of the election.
Since our initial poll in March, business owners’ concerns about potential policy changes have shifted notably. While taxation remains the top concern in both periods, its importance has increased from 38% in March to 45% in September.
To prepare for potential post-election policy changes, business owners say they are focusing on increasing cash reserves (38%), delaying major investments or expansion (36%), and diversifying product or service offerings (31%).Less than a quarter (15%) of business owners indicated the election has no bearing on their major business decisions this year.
Interest Rates Have Posed Challenges
Business owners report facing reduced profit margins (38%), increased borrowing costs (37%), and deferred capital investment (31%) due to high interest rates. Our flash poll found cuts are welcomed, with more than half of respondents (56%) expecting interest rate changes to positively impact their businesses in the next 12 months.
Additionally, business owners plan to increase cash reserves (43%), reduce reliance on debt (36%), and diversify funding sources (32%) as they continue to adapt to the rate environment.
Fraud Remains a Concern, but Prevention is a Challenge
Business owners are increasingly focused on fraud prevention to protect their operations. Payment fraud (49%) and identity theft (29%) remain the biggest fraud concerns for business owners, in line with findings from earlier this year (44% and 37%, respectively).
Still, implementing effective fraud prevention measures 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%). These challenges underscore the complexities involved in establishing robust fraud prevention systems.
What this means for business owners
Business owners need to be thoughtful about how political policy or interest rate changes can impact their operations and finances. Though many may wait to enact changes until the political and economic environment become clearer, planning for all outcomes is imperative. It’s never a bad idea to work toward increasing cash reserves during times of uncertainty. Contingency planning on pricing strategies and investments/expansion based on the outcomes in the coming months are also beneficial.
Banks are at a pivotal moment to help their business clients navigate cash flow and business operations concerns. Working with a trusted banker can ensure small business owners have the resources they need to prepare for whatever lies ahead.
Running a business is never business as usual and KeyBank can help you navigate challenges and opportunities throughout all business and political cycles. For additional insights and resources to help your business run better, visit KeyBank Small Business or connect with your local business banking advisors at a KeyBank branch near you.
*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.
Casey Christopher is Vice President, Business Banking Sales Leader for KeyBank in Central New York. She can be reached at [email protected].
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. All credit products and SBA Loans are subject to approval, terms, conditions, and availability and subject to change. KeyBank Member FDIC, SBA Express Lines of Credit ARE NOT FDIC INSURED OR GUARANTEED. Key.com is a federally registered service mark of KeyCorp. ©2024 KeyCorp. CFMA #240919-2790359
Protecting Your Small Business from Cybersecurity Breaches
Cybersecurity is a huge issue for small business owners who use their personal creditworthiness to gain access to business credit — and that’s what makes breaches so concerning. Here are a few items that small business owners should take into consideration when protecting their personal credit for their business.
Know Your Creditors
If your data has been breached, you’ll want to figure out what has been exposed. However, identifying the data compromised in a breach is not an exact science. Since cybercriminals often take steps to cover their tracks, companies don’t always have a clear picture of the depth and severity of the breach. Therefore, unfortunately, there’s no guarantee that your data is not in the hands of criminals.
Regardless, one of the best things you can do is educate yourself before a breach occurs. Take the time to understand who your creditors are and their history. Knowing your creditors can save you a lot of time should a new security breach occur and you see their name in the news or are tied to any breaches or other security concerns.
Consider Placing a Fraud Alert or a Credit Freeze on Your Credit Report
As the Federal Trade Commission outlines, fraud alerts last for 90 days and require verification of data before the issuance of new credit. A freeze blocks the opening of credit accounts without the use of a personal identification number (PIN), issued at the time you request the freeze. It’s a personal choice as to which option to pursue; however, if you apply for credit often, consider the impact of locking and unlocking your information each time a creditor requests access to your credit files.
Check Your Credit Accounts Frequently
Some companies have provided free credit monitoring to those how have been impacted by the recent breaches. However, bear in mind that cybercriminals often use data to commit fraud years after a breach. Therefore, while free credit monitoring is helpful, you may want to consider paying for additional monitoring once the free monitoring trial has ended.
Talk to Your Bank About Their Fraud Detection Capabilities
Stolen data provides criminals with the information they need to take over an account — they can use online banking to assume control of your personal or business accounts. According to CNBC, in order to avoid account takeover, experts recommend monitoring your accounts often, using complex passwords, opting for additional security (such as two-factor authentication) and setting up alerts related to activity in your account.
