Five Business Owner Observations Heading into 2023
Nationwide survey reveals owners feeling positive, but fear workforce issues could impact business
Business owners are feeling optimistic about their business in 2023, amid economic concerns. Most notably, business owners are confident their own business operations can withstand an economic downturn but don’t expect relief from current economic challenges in the near future, according to data from a new Agency Forward survey from Nationwide.
Five business owner observations leading into 2023:
- Business conditions for their own company will continue to be favorable.
- The US economic conditions will continue to make operations difficult for businesses.
- Operations will continue to shift toward in-person or hybrid instead of full-time remote.
- Mid-market businesses will hire more employees and have concerns over current workers “quiet quitting.”
- In 2023, businesses will struggle with managing inflation, attracting new customers, retaining current customers and keeping workers engaged and productive.
Optimism for business owners comes with expected economic challenges
Most business owners (72% of small business owners and 85% of mid-market business owners) believe business conditions for their own business are heading in the right direction for 2023. More than half of mid-market business owners (56%) and 37% of small business owners expect their revenue to increase next year.
Though their projections for business are hopeful, most business owners are cautious of how economic conditions will continue to impact them. Roughly two in three small (68%) and mid-market (63%) business owners believe that inflation will have an even greater impact on their business in 2023 than it does currently.
The survey also provided insight on how economic turmoil, especially inflation, is impacting business owners’ retirement plans:
- 42% of mid-market business owners and 27% of small business owners report they have pushed out their expected retirement date within the past two years.
- Mid-market business owners report rising inflation (78%), stock market performance (73%), impact of the pandemic (67%), and market conditions in their industry (67%) as factors contributing to their decisions to delay retirement.
“It is encouraging to learn that despite current economic headwinds, business owners have a positive outlook for 2023,” said Peter McMurtrie, President P&C Commercial Lines at Nationwide. “The challenges America’s business owners are expecting to navigate are not unique. Managing risk will be an important component to their business’ success.”
Workforce challenges remain but most are returning to normal operations
More than half (58%) of mid-market business owners report they are currently facing a labor shortage compared to 19% of small business owners. Two-thirds (60%) of mid-market owners and 23% of small business owners are concerned about their workers “quiet quitting.”
Some of the top workforce obstacles mid-market business owners anticipate next year include:
- Retaining current workers (42%)
- Preventing worker burnout/managing workers' mental health needs (41%)
- Keeping workers engaged and productive (37%)
Despite their concerns, 77% of mid-market owners still plan to hire more workers next year. Additionally, while 32% predict issues managing hybrid or remote workers, research shows most mid-market businesses (52%) are operating in-person or hybrid (43%).
Expense management is still a priority, insurance is a leading negotiation item
Agents are observing more requests from business owners for substantial changes to their insurance policies.
- Nearly eight in ten (79%) insurance agents report an increase in business owners attempting to renegotiate contracts to get better rates.
- Two in three (61%) agents report an increase in customers reducing their coverage.
- Nearly half (44%) of agents report an increase in cancellations of existing commercial policies.
“Agents need to have proactive conversations with their business owner clients. Our research also found that when a business owner was exposed to more information about risk management and business insurance, they rated business insurance as a higher priority within their operations budget,” said McMurtrie. “It’s clear that educating business owners on the risk of reducing or eliminating policy coverage will help them make better informed decisions about their commercial insurance needs.”
Nationwide partnered with Edelman Data & Intelligence to conduct a 15-minute national online survey of 500 small business owners, defined as owners of companies with 1-50 employees and less than $10 million in annual revenue, 200 mid-market business owners, defined as owners of companies with either 51-500 employees or $10 million -$500 million in revenue and 400 independent insurance agents, defined as a mixture of principals, producers, and customer service representatives. The small and mid-market business owner survey was fielded from October 7-27, 2022, and the independent agent survey was fielded from October 24-November 4, 2022. As a member in good standing with The Insights Association as well as ESOMAR Edelman Data & Intelligence conducts all research in accordance with local, national and international laws as well as in line with all Market Research Standards and Guidelines.