Small-Business Owners Offer a Gloomy View, Calling 2024 a Make-or-Break Year

Employment remains robust, inflation is being reined in, and the economy is growing at levels that support the case for a much hoped-for soft landing. Yet despite the general optimism those variables have inspired in consumers and economic analysts alike, small-business owners have turned rather glum. Indeed, over a third of respondents in a recent poll view 2024 as a make-or-break year for their businesses, with many moving to defensively cut costs as a result.

Despite the usually positive, can-do nature characteristic of many entrepreneurs, their outlook for the coming year is mixed at best, according to a survey by messaging app maker Slack. Fully 32 percent of bosses who responded said they aren’t sure they can keep their companies afloat until 2025, with 40 percent viewing 2024 as the decisive year they either make it or don’t.

What explains those moody small-business soundings when other polls show consumers and economists upbeat? 

One reason may be the entrepreneurs’ perspective, which can differ from other groups who offer feedback on economic forecasts. Yes, everyone has been through a pretty rough economic period, but as an Associated Press report said of the poll, “several years of dealing with the pandemic, rising inflation, and a tight job market” have left a lot of exhausted smaller company owners concerned about the months ahead. 

If those factors and other economic variables continue improving, things may be fine. If they don’t–well, ask the 32 percent of managers who aren’t sure they’ll make it through 2024. And if they are too bummed–or too busy–to reply, don’t even bother with the 38 percent of owners who said they’re more worried for their businesses now than they were a year ago.

There are other reasons for many fledgling entrepreneurs to view the glass as half-empty. The fundamentally difficult undertaking of creating and growing a new business was made more difficult by the economic shutdowns of the pandemic years.

According to recent U.S. Bureau of Labor Statistics figures, only about 57 percent of companies founded in March 2020 were still up and running during same month last year. Just 25 percent of small businesses launched in 2022 survived their first year.

More recent figures may further darken that perspective. The latest National Federation of Independent Business’s Small Business Optimism index registered a drop from 91.1 in December to 89.9 last month. Nearly 40 percent of respondents cited continued difficulty in filling job openings for their pessimism, with 20 percent naming inflation as still their top worry. 

Those blues are also affecting heads of bigger companies. According to a CNBC report Sunday, many corporations are moving to slash spending in what may “make 2024 the year of cost cuts.” 

Rising labor outlays from salary increases granted at the same time staff turnover rates spiked are now pinching balance sheets hard, just as booming post-pandemic consumer buying tapers off. As a result, companies including Nike, Mattel, PayPal, Cisco, Levi Strauss, UPS, and others have recently announced staff reductions to reel in costs as a means of countering decreasing revenues.

“You are in an environment where cost fatigue is very much part of the equation for consumers and business leaders,” EY chief economist Gregory Daco told the channel. “The cost of most everything is much higher than it was before the pandemic, whether it’s goods, inputs, equipment, labor, even interest rates.”

So does that mean all businesses are now pulling in their oars, battening down hatches, and preparing to wait out the feared storm? Apparently not. 

The Slack poll found that despite their relatively high degree of negativity, nearly three-quarters of small company owners are planning moves to improve their businesses and expand their customer bases. Another 43 percent are looking to test new tech in an effort increase efficiency and boost productivity–both well-known proactive hedges against feared activity slumps.