Small Business Confidence Turns Sunny—After Two Years of Rain
Ready for a big smile from the small‑biz world? The FSB’s Small Business Index (SBI) just crossed the +0 line for the first time since 2018, and that’s a sign that the late‑2023 recession is finally a story we can finish.
The Numbers
- Headline confidence: jumped +20 points to +5.5 in Q1 2024, from a rough -15.0 last quarter.
- That’s the first time the index has been above zero since 2018’s plateau.
Why It Matters
A lift in confidence means entrepreneurs are feeling less like they’re walking on ice and more like they’re stepping into smooth pavement. It gives a green light for expansion plans, for hiring, for investing in that shiny new tech gadget.
Sector Breakdown
- Manufacturing: +19.2 – biggest bang‑on’t from a tough last‑quarter slump.
- Retail & Wholesale: from -29.8 to +2.1.
- Professional, Technical & Scientific Firms: from -4.7 to +14.3.
- Accommodation & Food Services: recovered the most, climbing from -73.0 to -11.8 (still standing on the negative side but a huge leap).
- Information & Communication: the lone drop, falling 17.3 points from +24.4 to +7.1.
Expert Take‑away
“Having small‑business confidence back in positive territory in the opening months of 2024 is a relief,” says Tina McKenzie, FSB’s Policy Chair. “The rebound shows the shallow recession is firmly behind us, and businesses are eager to look ahead to better trading conditions.”
“Hospitals still need a boost,” she adds, nodding to hospitality firms whose outlook, while improving, lag behind the big players.
So, hold onto your coffee cups—small‑biz owners are stepping into brighter days, one hopeful month at a time.
Revenues and growth
Quarter 1 Income Snapshot (Soldier‑Style)
Just when we thought we’d be cruising in the “golden quarter,” the numbers showed that belt tightening is still a thing. Revenues slipped a tad from Q4 of last year—no surprise after that brief recession blur at year‑end.
What the Numbers Say
- 32% (≈3 in 10): Small businesses saw a bump in cash flow.
- 40.5% (≈2 in 5): A big chunk hit the drum‑roll of a sales dip.
The streak of negative growth—eight quarters running—reminds us that many owners are still on the edge of a tight budget horizon.
What’s Next? The Q2 Forecast is All Eyes on the Horizon
- 45.7%: Nearly half of the small‑biz squad expects a revenue lift next quarter.
- 23.6%: About a quarter braced for a shortfall.
Net balance? A healthy +22.1% optimism punch.
Growth Gear Shift
The hopeful gears are shifting:
- 52.4%: Now thinking about expanding within the next year.
- 12.6% vs. 15.0%: The contract corner shrank—fewer firms plan to shrink.
Barriers on the Map
Small obstacles creep in every quarter. This time:
- 64.6%: Domestic economy remains the biggest roadblock.
- 35.6%: Consumer demand keeps second place.
- 24.8%: Access to “just‑right” staff ticked up compared to last quarter.
So, while the tide is slow here, the tide is looking up. It’s enough to keep the engines humming—and a bit of humor keeps the journey smoother.
Cost pressures
Inflation Hits Small Businesses Hard: Q1 2024 Reveals a Costly Upswing
Picture a tiny shop owner juggling bills while the price tag on every good keeps climbing— that’s the reality for most small businesses this quarter. A full 83.7% of owners feel their operating costs have jumped since last year’s same period, up a few percentage points from the 82.5% slump in Q4. Funny how a drop in costs can still hurt the same way.
Cost Surge Inside the Cozy: Where the Numbers Break Down
- Utility Costs: 55.2% of firms say the big ones that keep lights on, water running, and heating humming have gnawed at their budgets. That’s a drop from 62.5% in Q4, but it’s still the top culprit.
- Labour Costs: Rising like a stubborn mountain, now affecting 48.1% of businesses—up from 45.7%—making each payroll assignment feel like a tightrope walk.
- Input Costs: Slipping from 41.6% to 36.5%, these are everything else the shop orders (raw materials, packaging, shipping), still a significant factor.
- Rent: The price tag on the shop front has hit a new high— 26.4% of owners say rent drives costs. This tops the previous record of 25.3% from last year’s Q1.
Small Shock, Big Impact: The Emotional Side of the Numbers
When you hear that which quarter recorded the peak cost spikes? It was back in Q4 2022, where 38.3% of small firms slapped their wallets together and cried. Now, the share with “significant cost increases” has dipped to 22.8%, a modest saving band.
That’s comforting on paper, but the everyday grind—coordinating deliveries, keeping the lights humming, and staying afloat in a market that keeps shifting—can feel like a rollercoaster without seatbelts. Small business owners often say they’re “treading water” between rent hikes and employee wages, hoping to keep the business afloat as the tide rises.
What It Means for Small Businesses
The spike in costs means more money reaches the bank account for every sale. Owners are forced to decide whether to raise prices, cut hours, or lean on savings. The all-too-familiar “do we add a surcharge or lose a customer?” dilemma is pushing leaders to rethink strategies.
So while the data spells out the downturn, it’s also a call-to-action: think creative, keep customers happy, and maybe spot a new growth niche. Because at the end of the day, those resilient small businesses that can keep their light on, do it with a grin.
Access to finance
Small Biz Finance: A Slight Pick‑Up in 2025
Even though the core interest rate is still doing the same treadmill‑dance, the “feel‑good” meter for tiny firms pinching their pockets has ticked up a smidge.
What the Numbers Say
- Good news: ~1 in 6 (16.5%) small businesses feel the new loans are available and affordable, up from 14.5% last quarter.
- Not so great: The share that rate it a poor squeeze fell from 52.0% to 46.0%.
- Interest rates: The chances of snagging a sweet rate under 4% doubled (8.3% vs 4.2% Q4), while the chance of a nasty 11%+ shot slid from 33.4% to 26.1%.
Key Takeaways from McKenzie
“We’re seeing a trend toward slimmer margins in Q1 after the holiday spend blew up the figures,” McKenzie explains. “But the next quarter’s sunshine looks brighter, which is pretty encouraging.”
“Small firms are finally ready to dust off the survival gear they wore during the pandemic, the ‘business cost crisis,’ and the energy bill spike,” she adds.
While the homegrown economy still gives small businesses a hard time with growth plans, a better-than-expected performance could unlock a golden moment for these brave entrepreneurs.
Last year, Covid sent half a million small firms out of the game. Though the bounce back is in motion, we’re still chasing that lost ground.
“Policymakers from across the aisle need a toolkit to spark real growth—from start-ups to big‑league scale‑ups,” McKenzie calls for. “And banks should treat small firms like they’re worth the heavy lifting, making their aspirations a win for everyone.”
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