Financial Preparedness of Local Business Owners in Question

Almost all small business owners (94%) believe they are financially prepared to navigate the next 18 months. A closer look shows that they may not be on such steady financial footing, according to TD Bank’s Financial Preparedness Survey: Small Business Owners’ Report, which surveyed small business owners (SBOs) nationwide including a sample in Long Island and New York’s boroughs.

More than half (65%) of local participants believe they have enough cash reserves to support operations. Those savings likely won’t sustain the business for long, though, with 61% of local SBOs stating that just two quarters of revenue shortfall would make them question their financial future. This is better than the 72% of SBOs nationwide who said two quarters of shortfall would generate concerns about their businesses’ longevity.

Short-term outlook

A majority of New York SBOs said increasing cash flow is their priority for the next 12 to 18 months. They will achieve this using multiple tools such as digital and AI-powered budgeting tools (50%), loans or lines of credit from their bank (37%) and guidance from a financial advisor (32%).

Local business owners also anticipate a strong year ahead, with 72% of local SBOs anticipating their profit will meet or exceed expectations over the next 12 to 18 months, and 77% expecting to hire in that timeframe.

The short-term outlook does include concerns including the rapid progression of AI, inflation and other economic conditions, as well as their ability to grow and attract customers.

Although local business owners stated the complexity of digital tools like AI can be a barrier to successful implementation, 70% are embracing AI to help manage finances and another 18% plan to adopt AI over the next year. The main use case for AI to is to lower expenses (60%) by leveraging it for data and analytics, accounting, marketing and customer service.

Area SBOs’ long-term plans are less clear. Just 61% reported having a succession/retirement plan for their company. For owners without a plan, the reasons vary from believing the business is not yet a stage where a succession plan is a priority to worries about family conflicts.

“New York small businesses are incredibly resilient and resourceful, weathering all kinds of economic conditions,” said Ralph Bumbaca, Regional President of Metro New York, TD Bank.  “Local SBOs are optimistic about their near-term success but deserve trusted guidance from their banker to help them navigate uncertainty and plan for the future.”

Seeking expertise

By working with a financial institution like TD Bank, one of the 10 largest banks in the U.S., SBOs can tap into expert insights for long- and short-term priorities from navigating shifting economic conditions and creating a long-term business plan.

“Small business owners don’t have to face challenges alone. Bankers are true small business experts — we’ve seen it all, and we know how to help,” said Andy Bregenzer, Co-Head of U.S. Commercial Banking at TD Bank. “SBOs who are going at it alone are leaving good advice — and potential opportunities — on the table.”