Business owners are upbeat, despite economic and employee hurdles

Despite a pessimistic general view of the U.S. economy, business owners are feeling optimistic about the economic prospects of their own operations. The contrast was revealed in Nationwide’s 2024 Economic Impacts Survey of 800 small and mid-market business owners.

72% of small business owners and half of mid-market owners rate the current economy as ‘poor’ or ‘fair’, with 6 in 10 citing inflation as a top concern, followed closely by fears around the upcoming presidential election (49%), high interest rates (49%), and supply chain issues (40%).

Yet, zoom in and the sentiment shifts significantly. When focusing on their own businesses, 51% of small business owners and 73% of mid-market owners rate economic conditions as ‘good’ or ‘excellent’. Moreover, 1 in 5 expect to expand or introduce new services this year.

Workforce challenges
In addition to macroeconomic concerns, business owners are also facing internal pressures from employees who are experiencing economic strain. In the past six months, business owners have experienced employees:

• Asking for better compensation (37% - all owners; 34% - small; 39% - mid-market)
• Asking for more or better benefits (32% - all owners; 25% - small; 40% - mid-market)
• Leaving for better paying jobs (28% - all owners; - 22% small; 35% - mid-market)
• Leaving for remote work opportunities (24% - all owners; 15% - small; 33% - mid-market)

“Business owners have a lot to navigate right now, from macroeconomic anxieties to workforce demands. What’s clear is owners aren’t taking it on the chin; rather, they’re rolling up their sleeves to improve the operational strengths of their firms,” said Russ Johnston, president of P&C Commercial Lines and Excess & Surplus, Specialty at Nationwide. “Insurance agents and brokers play a critical role as businesses adapt to these challenges, serving as a consultative partner in assessing protection needs and risk mitigation strategies to benefit their operations now and in the future.”

Optimizing operations and expenses
The research found business owners adopting a proactive, hands-on approach to meet the evolving needs of their workforce and protect their companies from external risks. 59% of small and 80% of mid-market owners are planning to or have already increased wages and many are targeting improvements to their employee benefit offerings.

Half of small business owners and two-thirds of mid-market owners are also proactively planning for potential crises that could impact their operations – leading to 9 in 10 saying they’re prepared to navigate a major business disruption.

Still, owners are budget conscious and focused on optimizing processes and reducing costs – and for some, that includes examining insurance as an area for savings. About 8 in 10 business owners (83% of small business owners, 77% of mid-market owners) have reviewed their commercial insurance policies online or with their agent in the past six months. More than one-third of mid-market owners have gotten rid of a policy or decreased coverage limits in that timeframe.

“In the face of short-term economic pressures, insurance professionals can help their commercial clients avoid sacrificing essential long-term protections,” said Johnston. “It’s a great time to check in and review policies, help them understand their options, and assist in implementing protective measures that can prevent costly disruptions down the line.”