UpSwell Marketing, a direct response marketing agency focused on helping small businesses grow and achieve long-term success, today released the results of their annual small business sentiment survey. Although inflation is looming over individuals and businesses alike, business owners are optimistic about future opportunities for growth.

The survey found that 90% of business owners expect their revenue to be better or remain the same as the previous year. Over 66% plan to see profitability rise in 2023, an even better outlook than the previous year.

Although it's a promising year, inflation still remains the number one concern (47.69%), as it affects all aspects of business financials — material costs, vendor expenses, labor compensation. As businesses have adapted over the last year, concerns with supply chain disruptions have dropped from 23.65% in 2022 to 8.19% in 2023. However, those concerns are being replaced by a new financial challenge. The biggest concern of nearly a third of all respondents (29.72%) is reduced consumer spending as we enter a period where household budgets are being constrained.

According to the survey, 73% of businesses experienced increased operating costs last year, and 68% of those businesses cushioned the increased expense by passing some or all of the cost to the consumer. The survey revealed the same expectations for the upcoming year, with many business owners planning to pass the costs or cost savings on to consumers to keep up with inflation and remain profitable.

The biggest distinguishing factor affecting businesses today is the lack of cash flow and capital. Although increasing gains in revenue look promising for many businesses, 35.29% of respondents claim this as the biggest operating burden — an 8-point increase from last year. The previous year's primary concern comes in second, with 22.1% feeling more pressure from the burden of recruiting and retaining employees.

"Businesses must be ready to adapt to the marketplace getting tighter. We are seeing small and medium-sized businesses shift their focus from hiring and expansion to maintaining market share, leaning into more strategic marketing spend — particularly digital. This allows businesses to invest in highly targeted tactics with the potential to yield greater returns and grow their market share in an increasingly competitive economy." - Eric Goodstat, CEO of UpSwell Marketing

Out of over 500 survey respondents, 46.27% plan to invest more in digital marketing, direct mail, and traditional marketing strategies, while only 9% are focusing on IT infrastructure, 5% on outsourcing, and 18% on other investment paths.

The SMB survey was conducted in 2023 with more than 500 small and medium size business owners in the United States between the ages of 1-69, all of which are small-to-medium-sized business owners. To learn more about this survey or get additional insights, contact UpSwell at [email protected].