Consider small business owners the front line of the American economy. They work directly with consumers and have a strong sense of their budgets, as well as how they feel about the economy.

Those insights have led nearly two-thirds (64%) of small business owners (SBOs) in the United States to report that "current business conditions are good or excellent," while 43% say they are concerned that a recession will impact the success of their business in the next year, according to Capital One's latest Small Business Growth Index. The two questions were asked separately to 500 SBOs, and there are some who believe that conditions are good or excellent now but also feel that a recession may be coming.

Most small business owners are confident in the economy. Image source: Getty Images.

Moving in the right direction

Capital One conducts this survey twice a year, and sentiment has improved since the previous iteration. Small business optimism has risen by five percentage points, while recession concerns have dropped by six percentage points.

"We have been working with small business owners for a long time and know this population well. Even so, we continue to be struck by their resilience," said Capital One's Small Business Bank Head Jenn Flynn in a press release. "While small business owners are expressing some real concerns over a potential recession, they aren't allowing this kind of speculation to dampen their efforts to grow or invest in their businesses."

While the majority of SBOs don't expect a recession, many are still preparing for one. 85% of those surveyed said a recession would hurt their businesses, with 65% saying it would cause them to be more conservative in ordering inventory or supplies. That was followed by 61% who said a recession would hurt cash flow, 59% who said it would negatively impact sales, and 57% who believed a recession would hurt their ability to grow and expand.

Only 32% of SBOs surveyed said they felt fully prepared for a recession. Another 42% described themselves as "somewhat prepared" with the remaining 24% said they are either "not very prepared or not prepared at all," according to the press release.

"Small business owners are cautiously optimistic -- they are holding to their financial forecasts, still planning to hire and still investing," Flynn said.

Be positive, but not naive

Small business owners are generally taking an attitude that would serve most individuals well when it comes to finances. Act based on the conditions you see now, but prepare for potential darker times.

The SBOs surveyed for this twice-annual report see that the economy has been strong, but they remain aware that things could change. And while the majority of those surveyed are confident about the overall economy, only 36% think their business will be in a better position in six months. That's down from 44% in spring 2019.

SBOs, like individuals, have to respond to the current market conditions, while also planning for the possibility that things take a turn for the worse. That's not being negative, it's being realistic and preparing for all contingencies.

The $16,728 Social Security bonus most retirees completely overlook

If you're like most Americans, you're a few years (or more) behind on your retirement savings. But a handful of little-known "Social Security secrets" could help ensure a boost in your retirement income. For example: one easy trick could pay you as much as $16,728 more... each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we're all after. Simply click here to discover how to learn more about these strategies.

Daniel B. Kline has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.