Even with inflation and concerns about a recession looming, eight in 10 U.S. small- and mid-sized business (SMB) respondents have expressed positive sentiments about the health of their business. In fact, 51% are holding steady, and 30% are thriving, according to a new report from the nonprofit IT association CompTIA.
They’re also generally positive about the outlook for the next 12 months. The percentage of SMBs who said they are struggling has declined from 29% in 2021 to 19% this year, the report said. Just over half said they feel good about business prospects for their industry. They’re even more bullish about their own companies, with 60% expressing optimism.
Economic worries temper SMB optimism
Continued inflation is a concern for 57% of respondents, while 53% cited the possibility of a recession as a worry in the next 12 months.
Meanwhile, a study by Verizon Business earlier this month painted a more sobering picture. The study found that inflation and financial security are top, ongoing concerns in an unstable economy and that digital transformation and access to technologies to help curb these issues are not occurring fast enough.
Nearly nine in 10 respondents (89%) said they’re worried about the state of the U.S. economy, and more than four in five said they’re concerned about small businesses in the U.S. and the global economy, the Verizon Business study said.
The two studies found very different views on the role of technology during unsettling economic times. Technology is critically important in helping SMBs reach their strategic objectives, according to the CompTIA research, with 62% of firms stating they believe tech is the primary factor and 31% a secondary factor.
Due to the financial and economic picture, the Verizon Business study found that only 29% of SMBs have transitioned to more digital or online operations in the past year, and 31% of SMB owners are cutting new tech investments.
Hiring and innovation are paramount
This is prompting SMBs to alter their priorities and adjust their investments in technology, the CompTIA study said. Overall, these businesses are shifting away from maintaining the status quo to implementing new innovations and hiring skilled tech workers.
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While five strategic objectives carry equal weight among SMBs, two recorded significant jumps in prioritization from a year ago, according to the CompTIA report. Nearly four in 10 SMBs said hiring skilled workers to drive strategic goals is their top objective for the next 12 months, up from 25% in 2021.
Similarly, 38% want to innovate and implement new ideas compared to 26% last year, according to the report.
“After two-plus years of being on the defensive simply trying to stay in business, SMBs are back to strategic, revenue-generating thinking centered on innovation, hiring additional tech staff, and investing more in training and certifications,” said Carolyn April, senior director of industry analysis at CompTIA.
Hiring skilled workers to drive strategic goals is cited as a top objective by 39% of respondents, up from 25% in 2021. Similarly, 38% of SMBs seek to innovate and implement new ideas and innovations, compared to 26% last year, according to the report. These more aggressive goals align with generally positive attitudes about the current state of business.
“These positive feelings are tempered by concerns about inflation, recession, supply chain challenges, and other macroeconomic issues,” April said. “But, the attitude of many SMBs appears to be that, while you can’t control world events, you can plan to better withstand them by building cash reserves, developing a system of backup suppliers for goods and services, and continuing with marketing and innovation efforts.”
Tech spending varies
Just over half of SMBs (52%) in the CompTIA study reported a technology spending level appropriate for their business objectives, while the remaining 48% fall into the camp of believing spending is too low or too high for various reasons. Annual spending on technology falls within the range of $10,000 to $250,000 for two-thirds of SMBs.
“The gap between spending reality and real spending need is a perennial issue for SMBs, who are constantly managing resource allocation,” April noted. “But, if the strategic mindset about business goals and the role technology plays in attaining them continues apace as it is now, business owners will hopefully realize that committing to further investments will be key for success and help buttress them against another unexpected body blow.”
Tech investments are the last to be cut, according to the Verizon Business study. Compared to cutting spending on operational investments (39%) and employee events (59%), the research found that only 29% of respondents have already cut or plan to cut tech investments in the next six months.
Also, top of mind for the Verizon Business study respondents is lingering cybersecurity concerns. Consistent with 2021, a majority of small and midsize business decision-makers consider viruses (55%), malware and ransomware (54%), sensitive data vulnerabilities (51%), password theft (51%), and spam and phishing (50%) the biggest security risks to their business this year.
CompTIA’s SMB Tech Buying Trends is based on an August 2022 survey of tech and business professionals from 650 SMBs in the U.S. with fewer than 250 employees, the firm said.
Verizon Business said its findings come from a survey of 609 SMB owners and decision-makers between Aug. 12 and Aug. 19.