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Less than half of SMBs say their revenue increased over the past year; 50% expect revenue increases through Q1 2025
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A quarter expect a deteriorating economy to extend into 2025, down from 42% last year at this time
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The amount of SMBs likely to invest in technology and infrastructure jumped 61% year-over-year
Despite 2024’s economic punch, small businesses proved resilient with 40 percent experiencing revenue increases. They are also more optimistic entering the new year than they were a year ago at this time, according to the 2024 Small Business Index from Thryv® . The leading do-it-all small business software platform provider, Thryv surveyed 500+ small business owners and decision makers in various industries across the U.S. from September 4-13, 2024.
“Planned investments in technology and AI will help small businesses scale with existing staffing levels, pointing to a promising year ahead.”
Although more than half (53 percent) of small businesses cited a deteriorating U.S. economy in 2024, their economic outlook is on a slight upswing entering 2025. While less than half (45 percent) expect the economy to improve, that is a 61 percent increase over last year at this time.
The Role of Technology
The majority (66 percent) of small businesses plan to manage any expected lift in their business with existing staffing levels. Technology stands to play a role in how they will scale despite level headcounts: 29 percent of small businesses say they are likely to invest in equipment and infrastructure, a 61 percent increase over 2023. More than a third plan to increase their technology budget. Artificial Intelligence (AI) will also be a factor: 31 percent are currently using AI, but 43 percent expect to use AI in 2025, a 38 percent year-over-year increase.
“As small businesses look to turn the page on an economically challenging 2024, a majority tell us they are holding their own against their competitors and half are expecting to see revenue increases over the coming months,” said Joe Walsh, Chairman and CEO of Thryv. “Planned investments in technology and AI will help small businesses scale with existing staffing levels, pointing to a promising year ahead.”
2024 Challenges and Successes
- Degree of Difficulty: when asked if it has been more difficult or easier to run their business than it was a year ago, 51 percent say it is about the same, while 38 percent say it is more difficult. Only 11 percent say it is easier than a year ago.
- Economic Woes: almost one-third worry efforts to control high inflation will not come fast enough to help their business.
- Election Concerns: just over half (53 percent) worried about the U.S. presidential election and its impact on the economy and government regulations.
- Revenue Changes: 40 percent of SMBs say their revenue increased over the past year.
- Competitive Strength: an impressive 82 percent say they hold their own against their competitors.
- Employee Count: only roughly 14 percent have decreased headcount.
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Looking Ahead to 2025
- Revenue Expectations: 50 percent expect their revenues to increase in Q1 of 2025.
- Profit Margins: 47 percent expect their profit margins to remain level; 39 percent expect their profit margins to increase; 14 percent expect a decrease.
- Economic Outlook: when asked what their expectations are for the U.S. economy over the next 6 months, 45 percent expect it to improve; 30 percent expect it to remain the same; 25 percent expect it to deteriorate.
- Investing in their Business: 43 percent are likely to invest in equipment or infrastructure; 29 percent are unlikely to make those investments; 28 percent are indifferent.
- Technology Investment: 57 percent expect their software budget to remain the same; 37 percent plan to increase their investment; only 6 percent expect to decrease budget.
- Employee Count: 66 percent expect to keep their headcount the same; 28 percent expect to increase it; only 6 percent expect a decrease in headcount.
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Why They Do What They Do
When asked what best describes why they opened their business, 48 percent say it has always been their dream to be self-employed.
This description aligns with answers received to the question: what brings you the most joy from owning your own business:
- 35 percent say being their own boss
- 29 percent say making a living doing something they love
- 14 percent say creating something that fills a need for people
- 13 percent say having a work/life balance
- 9 percent say providing employment for others
“Being your own boss is a dream that comes with a unique set of challenges. That’s where marketing automation and operations technology can step in, helping those dreamers achieve sustained growth so they can focus on doing what they love,” said Walsh.
