Small-business owners say they aren't scared of another recession, even though some signs suggest one may be on the horizon.
That's according to small-business online lender Kabbage and a recent survey of more than 500 of its customers. The survey found that 80 percent of entrepreneurs feel confident their companies are "well-positioned to outlast a market downturn."
According to the Federal Reserve Bank of New York's recession probability chart, there is about a 30 percent chance of an economic downturn taking place in the next 12 months. And at least one prominent economist, Gary Shilling, president of economic and financial research firm A. Shilling and Co., says the U.S. is already experiencing an economic slowdown. "It will probably be a run-of-the-mill affair, which means real GDP would decline 1.5 percent to 2 percent, not the 3.5 percent to 4 percent you had in the very serious recessions," Shilling said in a recent interview.
While almost all small-business owners in Kabbage's survey said they have a plan for how to prepare for the next recession, their strategies vary significantly.
One-third of survey respondents said they were preparing for a downturn by taking actions that would increase cash flow, such as growing their customer base, securing more contracts, or expanding sales. The two other most popular growth strategies cited were launching new products or services and pursuing business partnerships to reach new customers.
"Despite the growing fears of economists and Wall Street, entrepreneurs are ready to rise to the challenge," Kabbage chief revenue officer Laura Goldberg said in a statement. "The data demonstrates how every small business is unique and how market shifts impact them individually."
Many entrepreneurs already are taking steps to reduce costs: 39 percent said they're reducing operational expenses to increase cash reserves and 8 percent have postponed expansion plans. Of all the business owners surveyed, 10 percent said they were unsure of the best way to prepare for a recession.
One reason business owners feel confident their companies can survive a downturn is that many weathered the storm of the great recession of 2008 and 2009. Entrepreneurs in the marketing, retail, and medical services industries all cited their companies' ability to rebound from the most recent economic crisis when asked about their overall business confidence.