Two-thirds (66%) of small business owners (SBOs) say recent fluctuations in the stock market have not changed their business outlook, according to Capital One’s latest Small Business Growth Index, a biannual survey of 500 SBOs gauging sentiment related to the economy, business conditions and plans for growth.

At the same time, nearly half (49%) of SBOs are concerned that a recession could impact the overall success of their company in the next year.

“Small business owners remain cautiously optimistic,” said Jenn Flynn, head of small business banking at Capital One. “While we saw a slight dip in optimism compared to Fall 2018, small business owners are still making strategic investments in their businesses, while paying close attention to the uncertainty in the stock market and evaluating the potential impact of a recession.”

Some key themes uncovered by the Spring 2019 Small Business Growth Index included:

• Many SBOs are preparing for the impact of future stock market volatility: 49% are or will be more conservative when it comes to inventory or supply management, 36% say it has or might decrease their sales, and 34% say it has or might impact their ability to expand and grow their business. Additionally, 27% say they are not or may not be able to hire new employees.
• However, the fluctuations in the stock market have not changed the outlook of 66% of business owners. Additionally, 40% of SBOs report an increase in sales over the past six months.
• Since last fall, optimism has dropped eight percentage points, with 59% of SBOs saying business conditions are good or excellent, down from 67% in October 2018.
• The economy and a tight labor market are impacting small businesses’ ability to hire, while those who plan to hire are competing for talent with their pocketbooks.
• Twenty-nine percent of SBOs plan to hire in the next 6 months, down from 33% in fall 2018. Sixty-six percent of these new hires will be full-time employees.
• The majority of SBOs are competing for talent with their pocketbooks, with 76% of those who plan on hiring in the next 6 months noting they are providing industry leading or competitive salaries. Forty-seven percent say they are providing more benefits to employees and 43% say they are marketing their business as a great place to work. Only 35% say they are investing in differentiated or modern office perks, and 29% say they are providing an option for flexible work environments.
• Half (51%) of SBOs say the tax plan has been positive for small business. Male business owners are more likely to say the plan has been positive for small business (57%), compared to 41% of female business owners who say it has been helpful.
• More than half (53%) of SBOs with $1 to $10 million in revenue believe artificial intelligence (AI) and machine learning is already impacting or will impact their industry. Additionally, 48% of SBOs with $1 to $10 million in revenue are concerned about their ability to hire the right tech talent to help advance their business into the future.

“Change is a constant for small business owners, and it’s encouraging to see leaders remain resilient as they interpret new things like tax reform and the impact of technology,” said Brad Jiulianti, head of small business card at Capital One. “We look forward to seeing how business owners continue to innovate to meet the changing needs of today’s marketplace.”