D.C. business owners may not be as financially prepared as they believe

Business Journals

01-06-2025

Nearly all (94%) of small business owners (SBOs) across the country report they believe their company is financially prepared for the next 12 to 18 months. Digging deeper in Washington, D.C., SBOs are concerned about their ability to sustain operations, with 81% saying it would take just two quarters or less of revenue shortfall before they became worried about their company's future — higher than the national average at 72%.
This is according to TD Bank's inaugural Financial Preparedness Survey: Small Business Owners Report, which surveyed U.S. SBOs' current confidence in their financial preparedness. A core survey sample was conducted in the D.C. metro area.
In D.C., the majority of SBOs (82%) are the sole person responsible for managing their company's financial preparedness. When asked about the top barriers to better determining their financial picture, local business owners indicated their top gaps are a lack of financial education and/or previous business experience and having trouble adapting to customer preferences.
Long-term preparedness of D.C.-area business owners also is in question, with just 26% indicating they have a retirement or succession plan in place. There are several reasons why these have not been developed, with 39% reporting they don't believe their business is mature enough yet to warrant a succession plan, 32% of SBOs expressing concern about the cost involved and 22% worrying about potential family conflicts when discussing the future. Nearly a quarter (21%) of D.C. SBOs stated they have no plans to ever develop a retirement/succession plan.
"Small business owners often act as the whole executive team of their enterprise —CEO, CFO, marketer, HR and more — which means they frequently are focused on day-to-day operations," said Chris Ward, regional president of the Mid-South Metro, TD Bank.
"SBOs don't have to do it all alone and accessible resources such as their banker can offer financial check-ups and guidance on how to create a business and financial plan that spans several years."
Local business' outlook mixed
Looking to the next 12 to 18 months, 76% of D.C. SBOs expect their business to meet or exceed profit expectations and 75% anticipate they will hire additional staff. Survey respondents also noted they are taking steps to improve their business' outlook over the next year and a half, including using digital and AI budgeting tools (51%), getting a loan or line of credit from their bank (48%) and hiring a financial advisor (41%).
Still, economic conditions remain a top external concern for SBOs in D.C., with inflation and interest rates ranking as their biggest worry in the year ahead. Survey participants also indicated they have operational concerns for their companies, with investing in marketing, needing to reduce their workforce and labor shortages topping the list.
"Owning and operating a small business is a rewarding but stressful enterprise," Ward said. "Indicators show that SBOs are still feeling positive but are closely watching external factors. Just as individuals create a 'rainy day fund,' SBOs should aim to build up their cash on hand to better withstand the unexpected."
TD Bank's Financial Preparedness Survey: Small Business Owners Report surveyed business owners with more than $100,000 in annual revenue and 100 or fewer employees. A representative sample of 150 business owners in D.C. participated. Among these, 75% had fewer than 20 employees and more than half had annual revenues between $100,000 and $500,000.
TD Bank is one of the 10 largest banks in the U.S. by assets, providing over 10 million customers with a full range of retail, small business and commercial banking products and services at more than 1,100 convenient locations throughout the Northeast, Mid-Atlantic, Metro D.C., the Carolinas and Florida. Find out more at www.td.com/us.