• While 8 in 10 small business owners are optimistic about their business outlook in the coming year, nearly a quarter of our survey’s respondents expressed concerns over potentially shrinking cash reserves and facing possible financial challenges like tariffs, inflation, and staffing difficulties.
  • Business owners’ optimism, despite difficulties, may stem from confidence gained after overcoming unprecedented challenges, such as the pandemic.
  • For owners concerned about future cash reserves, exploring financial tools such as business lines of credit may provide an additional safety net. These resources may help your business navigate challenges like inflation and staffing costs, all while supporting your growth plans. 

The latest results of PNC’s semi-annual Economic Outlook Survey showed a shift in how small business owners (SBOs) think about their company’s future finances. Twenty-three percent of owners expect their cash reserves to shrink in the upcoming year, surpassing for the first time the number of people anticipating higher cash reserves in the same period.

While business cash reserve challenges aren’t new, our fall survey shows these concerns are rising, even as most business owners remain optimistic about the company’s outlook.

To better understand this contradiction, let’s dig deeper into the pressures small business owners may be facing. We’ll also look at how they may be able to better position their businesses to weather financial setbacks and grow — even with smaller cash reserves.

The Cash Crunch: Challenges for SBOs

Our survey found that more than half of business owners expect supplier prices to rise, and nearly half are extremely concerned about inflation. At the same time, many don’t anticipate higher sales or profits in the year ahead.

With less cash on hand, businesses may struggle to cover payroll, invest in growth, or absorb surprise expenses. It could also potentially make it more difficult to meet rising costs without dipping into financial safety nets. Combined with higher interest rates, slower sales, and hiring struggles, some small businesses might feel the strain as they work to stay afloat.

Why Small Business Owners Remain Confident

Despite expressing concerns around profits, tariffs, and inflation, over 8 in 10 small business owners responded that they were optimistic about their business’s outlook. This optimism may come from business owners’ belief that they can find a way to succeed despite economic slowdowns and challenges. 

Some reasons for their confidence in their business’s resilience and ability to prosper may be: 

  • Many business owners have proven to themselves that they can adapt, even during a pandemic and extreme supply chain challenges.
  • Small businesses have a greater trust in the longevity of their customer relationships and the market’s long-term ability to recover.
  • Business owners are more willing to adjust or change course, whether that’s through carefully raising prices, cutting costs, or improving operational efficiencies. 

How Small Businesses Can Weather the Storm

Even if you’re confident about your business’s outlook, thin cash reserves may make it critical to plan ahead and lean on various financial tools. While small business owners can’t control the economy, they may be able to control how they prepare for economic shifts. A few strategies you may consider are:

  • Sharpening forecasts to look 30 to 90 days in the future and running “what if” scenarios, like slower sales or higher costs.
  • Creatively managing expenses by negotiating better terms with suppliers, locking in prices on key materials, and buying in bulk at current prices.
  • Rethinking staffing with contract or seasonal help if demand shifts.
  • Lining up additional funding options, such as a business line of credit, to potentially cover gaps and protect your savings.  

Benefits of Having a Business Line of Credit Available

Besides potentially being handy in emergencies, a business line of credit is a versatile financial tool that you may be able to use in many circumstances. For example, it may help your business stay steady during slow periods and help you capitalize on opportunities. Here’s a closer look at a few of the key benefits of business lines of credit: 

  • Flexibility in use: May cover payroll, inventory purchases, shop repairs, and seasonal dips. You typically borrow only what you need, up to your credit limit, and repay over a longer period than lump sum loans.
  • Cost efficiency: You only pay interest on the money you borrow, generally at lower rates than business credit cards.
  • Growth opportunities: Having extra funding available may let you take advantage of business opportunities or equipment purchases without tapping into limited cash reserves. 

These advantages make a line of credit one of the more practical financing tools for small businesses. PNC offers business line of credit options designed to support short-term needs and long-term growth. See which one may help your business’s evolving priorities.