73% of small businesses have grown in past year despite more than half reporting labor challenges, U.S. Bank report reveals

Nearly three-quarters (73%) of American small business owners have reported growth over the past year, with even higher percentages among Black (84%) and Hispanic (80%) owners, according to the U.S. Bank 2024 Small Business Perspective. This report, based on a survey of over 1,000 small business owners, delves into the multifaceted challenges and stressors these entrepreneurs face in the current economic landscape. Key issues include employee retention, the impact of artificial intelligence (AI) on operations, and job security.

Despite ongoing economic stressors, small business owners remain optimistic and resilient. Many are grappling with labor challenges, such as being understaffed (52%), navigating a competitive labor market (77%), and struggling to increase employee salaries to match inflation (65%). To counter these issues, 83% of owners plan to offer flexible hours to promote a better work-life balance.

Digital transformation is a significant focus, with 75% of owners planning to invest in digital tools over the next year to achieve their business goals. AI and automation are also gaining traction, with 68% of owners recognizing their benefits and 60% having already implemented such solutions. However, there are concerns, with 47% of owners worried that their businesses could be replaced by automation.

Shruti Patel, chief product officer for business banking at U.S. Bank, emphasized the importance of digital tools in enhancing efficiency and productivity. She noted that U.S. Bank aims to provide a seamless integrated experience across banking and payments to help streamline cash flow and workflow for small businesses.

The survey also highlights the top five macroeconomic stressors for small business owners: competition (73%), economic environment (71%), inflation and increased costs of materials/supplies (65%), supply chain disruptions (47%), and obtaining sufficient funding (42%). In an election year, the political environment also ranks as a significant stressor for 31% of owners.

These stressors have tangible impacts, with nearly half (49%) of owners stating that these factors delay their business growth. Specifically, 48% of those citing competition and 39% of those citing supply chain disruptions report delays in growth. Additionally, 53% of those concerned about the economic environment and 58% worried about inflation report decreased revenue.

Digital tools and AI are seen as pivotal for future success. About 71% of owners and 55% of employees agree on the necessity of digital tools to simplify work and enhance productivity. However, there's apprehension, with 48% of employees unclear about how automation will change job expectations and 25% worried about job replacement. This concern is more pronounced among Gen Z and Millennial employees.

For a comprehensive look at these insights, you can read the full article on U.S. Bank.