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American Express Small Business Financial Confidence Report Reveals Impacts of the Economy on Financial Decision Making

American Express released the second edition of its recurring Small Business Financial Confidence Report, which looks at current market trends and their influence on the confidence of small businesses when making financial decisions.

Photo Credit: Courtesy of American Express
Photo Credit: Courtesy of American Express

Financial Confidence Trends

In the inaugural Small Business Financial Confidence Report published May 25, 2023, 54% of small business owners surveyed stated they felt very confident in their ability to make sound growth decisions. The latest data polled two months later among small businesses shows a 5% decrease in confidence in their financial decision making, dropping to 49%.

Several contributing factors were noted relative to the decrease in confidence, most notably the broader macroeconomic environment. 80% of all small businesses surveyed agree that the current economy is negatively impacting their long-term financial confidence, with 35% of those businesses citing inflation as a primary concern. Overall, more than two thirds of respondents (72%) believe inflation will be worse or the same in 2024.

Other top concerns among those surveyed included operating costs (34%), labor costs (31%) and consumer spending (26%).

At the same time, nearly half of small business respondents (48%) stated the regional bank failures in early 2023 had no impact on their confidence levels with their bank provider. However, respondents were recorded as evenly split between feeling greater confidence (26%) or less confidence (26%) in their banking provider since those events occurred.

Service Excellence is #1 Priority when Choosing Financial Partners

Overall, nearly half (48%) of the small business respondents stated customer service is the most important factor when considering new banking partners. Respondents also reported speed and efficiency as the second most important factors (38%).

Heightened Interest & Shifting Perceptions of AI

The interest in artificial intelligence (AI) has increased over the last two months, as now 25% of small businesses surveyed who are not currently prioritizing AI would consider utilizing it in the future compared to 20% in the March report.

While interest in AI has increased since the first report, there has also been an increase in mistrust for the technology within the survey population.

Between March and May, there was a 39% increase in mistrust of AI among small business respondents who are not considering using it in the future. Mistrust was the top explanation (43%) why small businesses surveyed are not considering using AI, compared to 31% in March.

Methodology: The survey of 550 U.S. small businesses was conducted by The Morning Consult LLC on behalf of American Express from May 24 to May 30, 2023. The survey includes responses from 250 businesses with less than 10 employees (margin of error +/- 6 percentage points); 200 businesses with 11-100 employees (margin of error +/- 7 percentage points); and 100 businesses with 101-500 employees (margin of error +/- 10 percentage points). The margin of error for the full sample is +/- 4 percentage points.

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