New survey finds small businesses owners not as financially prepared as they think

The Market Online

01-05-2025

A recent survey prepared by Toronto-Dominion Bank stock (TSX:TD) revealed that small business owners across the United States may not be as financially prepared as they believe
The inaugural Financial Preparedness Survey: Small Businesses Owners' Report highlights a significant gap between perceived and actual financial readiness among small business owners
43 per cent of owners indicated that their business would not survive if they fell short on revenue for three to four months
Toronto-Dominion Bank stock (TSX:TD) opened trading C$87.96
A recent survey revealed that small business owners across the United States may not be as financially prepared as they believe. The inaugural Financial Preparedness Survey: Small Businesses Owners' Report highlights a significant gap between perceived and actual financial readiness among small business owners (SBOs).
At a baseline, nearly all SBOs (94 per cent) express confidence in their company's financial preparedness for the next 12 to 18 months. However, a deeper analysis shows that this confidence might be misplaced. The survey found that nearly three-fourths (72 per cent) of owners believe they can withstand revenue shortfalls for just two quarters or less before becoming concerned about the future of their business.
43 per cent of owners indicated that their business would not survive if they fell short on revenue for three to four months.
Despite these concerns, financial preparedness remains a priority for SBOs, with nearly all respondents (99 per cent) assessing their financial status quarterly or more frequently. Cash flow is a critical indicator, with more than half (52 per cent) of respondents citing positive cash flow as a sign of financial preparedness, while 37 per cent believe having enough capital to weather emergencies is crucial.
To bolster their financial preparedness over the next year and a half, a vast majority (82 per cent) of SBOs are likely to consider applying for a loan or line of credit. The primary goals for these financial instruments include maintaining company operations (38 per cent), undertaking significant financial technology upgrades (33 per cent), expanding into new market verticals (33 per cent), and making payroll (32 per cent). Encouragingly, 87 per cent of SBOs are confident their applications will be approved.
The survey, conducted by TD Bank (TSX:TD), also points the importance of financial guidance, with SBOs seeking advice on best practices for running their business. However, less than half (46 per cent) are turning to a banking or financial partner for this guidance. Instead, 45 per cent of SBOs are consulting other small business owners, and another 30 per cent are utilizing generative AI tools like ChatGPT.
Conducted by Wakefield Research, the Financial Preparedness Survey: Small Businesses Owners' Report surveyed 250 nationwide respondents and 150 respondents among small business owners with 100 employees or fewer and annual revenues of $100,000 or more. Key findings: 94 per cent of SBOs believe their company is financially prepared for the next 12 to 18 months.
of SBOs believe their company is financially prepared for the next 12 to 18 months. 72 per cent of SBOs can withstand revenue shortfalls for just two quarters or less.
of SBOs can withstand revenue shortfalls for just two quarters or less. 43 per cent of SBOs would not survive a revenue shortfall of three to four months.
of SBOs would not survive a revenue shortfall of three to four months. 99 per cent of SBOs assess their financial preparedness quarterly or more frequently.
of SBOs assess their financial preparedness quarterly or more frequently. 52 per cent of SBOs cite positive cash flow as a key indicator of financial preparedness.
of SBOs cite positive cash flow as a key indicator of financial preparedness. 82 per cent of SBOs are likely to apply for a loan or line of credit in the next 18 months.
of SBOs are likely to apply for a loan or line of credit in the next 18 months. 87 per cent of SBOs are confident their loan applications will be approved.
of SBOs are confident their loan applications will be approved. 46 per cent of SBOs seek financial guidance from banking or financial partners.
of SBOs seek financial guidance from banking or financial partners. 30 per cent of SBOs use generative AI tools like ChatGPT for financial advice.
This survey exposes the need for small business owners to reassess their financial strategies and seek reliable guidance to ensure long-term sustainability.
'Now, more than ever, it is critical for business owners to be financially prepared,' Andy Bregenzer, co-head of U.S. commercial banking at TD Bank said in a media release about this survey. 'Business owners who invest the time to create a financial plan will be better positioned to face challenges and seize new opportunities. Financial preparedness is not just about business survival but also about positioning your business to grow with confidence no matter what the future holds.'
The Toronto-Dominion Bank and its subsidiaries are collectively known as TD Bank Group. TD is the sixth largest bank in North America by assets and serves more than 27.5 million customers. TD had $1.97 trillion in assets on April 30, 2024.
Toronto-Dominion Bank stock (TSX:TD) opened 0.14 of a per cent lower C$87.96 and has climbed 10.74 per cent since this time last year.
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(Top image via Adobe Stock.)