Small-business owners are focused on long-term growth and succession planning, according to a recent survey conducted by U.S. Bank. The nationwide survey of 1,000 small-business owners explored how they are navigating challenges ranging from economic stressors to the rise of generative AI.
With more than half of U.S. small-business owners now over age 55, succession planning is becoming “increasingly urgent,” according to the survey. While many owners are not yet ready to step away, with only 54% having created a succession plan, new generations are preparing to take their place. More than one-third (36%) of Gen Z and Millennial owners say they plan to acquire a business from a retiring owner.
The report reveals a striking gap between intention and action. While 85% of surveyed participants say they originally became an owner to create something they could pass on, and 84% wanted to create generational wealth for their family, only 54% have a formal succession plan in place.
A growing number of owners (62%) have seen their retirement timelines accelerate in the past five years. But for many, navigating succession is a challenge: 62% find the process overwhelming; 56% worry they won’t get a reasonable price for their business when it’s time to sell; and 53% reported lack the proper resources or guidance to plan for the future of their business.
Owners with strong business performance were more likely to have a succession plan in place: 64% of those with a plan reported significant growth over the past year, compared to 50% of those without a plan.
Nearly 4 in 10 small-business owners (37%) say they plan to sell their business in the next 12 months, suggesting how quickly transitions of ownership may be approaching for some businesses. However, retiring business owners are not the only ones looking to sell, with a higher number of Gen Z and Millennial owners (41%) than Boomers and Gen X (33%) saying they plan to sell their business.
The need for small-business owners to make long-term plans is reinforced by the day-to-day worries they are facing. Respondents reported their top macroeconomic stressors as: the economic environment (98%); inflation or increased costs of materials/supplies (92%); competition (92%); the ability of consumers to maintain their spending (86%); fraud or cybersecurity threats (85%); and obtaining enough funding to support their business (84%).
Despite these stressors, 96% of owners reported their business as currently successful and 88% saw growth in the past year. To manage pressures and position their businesses for the future, many owners are prioritizing key steps in the year ahead, including focusing on revenue (48%), ensuring enough staff (33%), improving company efficiency and cost-effectiveness (32%), and reacting to the general economic landscape such as inflation and recession risk (29%).
As small-business owners look to create long-term success for their businesses, they are embracing generative AI and digital tools. Nearly 6 in 10 (57%) are currently using or plan to implement Gen AI solutions in the next year. Among those using it, the top applications include content creation (44%), data analysis and information gathering (41%), and marketing and sales strategies (39%). The majority of owners using Gen AI have found that adoption doesn’t require a massive investment. Nearly 7 in 10 (68%) Gen AI users report spending less than $50 a month on it, and nearly 1 in 5 (18%) are using free tools or subscriptions. These tools allow users to spend more time on the personal connection they have with their customers (88%).
Still, the rise of AI is not without tension. Over 8 in 10 (81%) report keeping up with technological advancements such as Gen AI is stressful, and 56% worry their business (or products/services) will be replaced by Gen AI or automation.
Looking at payment methods, nearly half (48%) of owners still report cash as a primary method of in-person payment. However, newer methods of payment are catching up with 42% reporting tap-to-pay as a primary method.
