Inflation was identified as one of the top business concerns impacting small businesses, according to the results of the 2023 Small Business Survey, released by TD Bank. The survey collected insights from over 500 small business owners (SBOs), with between $250,000 and $5 million in annual revenue, on the challenges, priorities, and trends heading into the second half of 2023.

In addition to 62 percent of business owners naming inflation as one of their primary business concerns, other top areas of concern were:

• Employee retention and management (24 percent)
• Product shortages (21 percent)
• Keeping up with the competition (20 percent)

“In response to rising interest rates and inflation driving up the cost of doing business, small business owners have had to increase spending to stay competitive," said Chris Giamo, Head of Commercial Banking at TD Bank. "That, coupled with consumers rethinking spending habits, means that inflation is making it harder for businesses on multiple fronts to increase profits and revenue. As a bank, we have seen firsthand the important role financial institutions play in helping business owners access the capital they need to safeguard their business and maintain the loyalty of their customers in challenging times.”

A Hopeful Future

Even with the volatile macroeconomic environment, tight labor market, and the threat of a recession impacting various aspects of their business—from talent to product shortages and more—SBOs continue to have faith in their businesses’ success. In fact, the majority (80 percent) reported feeling optimistic about their business performing well in the year ahead, while 20 percent reported concern about their small businesses’ survival.

The data from the survey highlights that resilience remains a necessary characteristic of SBOs as they continue to face uncertainty and adapt their business models to provide the best service and products for consumers.

“As a business owner, one of the most important relationships you can develop is with your bank," shares Amy Dinkar-Patel, Head of Small Business & Commercial Distribution at TD Bank. "Banks serve in the same community where business owners live and work. This allows them to channel their local expertise into helping SBOs create a successful business strategy that prioritizes growth and stability. With small businesses striving to thrive in the year ahead, having a trusted banking partner at the table will be crucial."

Small Business Priorities

To actualize a positive business performance for the remainder of 2023, SBOs are setting their sights on reinforcing the financial strength of their business, beating out the competition, and tackling talent retention.

In addition to navigating the daily challenges of running a business, SBOs believe prioritizing the following areas will be key to achieving long-term business goals amid challenging economic conditions:

Strive to Survive: Neary one in five (17 percent) SBOs identified surviving as a business as their top priority for the second half of 2023. For 35 percent of SBOs, this means applying for a loan or line of credit this year to make crucial investments in their business that will set them apart from the competition.

Eyes on the Prize: Although one in five (20 percent) SBOs reported concern with keeping up with the competition, less than 1 in 10 (9 percent) are prioritizing competing with other businesses. In fact, most SBOs are focused on running their own race, with 35 percent choosing to prioritize attracting and retaining their customers rather than focusing on competitors.

Retaining Talent: When it comes to employees, the majority of SBOs (70 percent) are prioritizing retaining their staff, with only 4 percent of SBOs selecting cutting employees as a priority, despite economic concerns. Reassuringly, over one in four (26 percent) SBOs are prioritizing hiring more employees.