Small and medium sized businesses continue to be the backbone of the national economy yet remain cautiously optimistic amid ever rising obstacles and challenges. Small business owners continue a delicate balance between what they can control and how they adapt to those outside forces that they cannot control. In a recently released report by MetLife and the US Chamber of Commerce, there seems to be looming concerns facing small businesses that will have to be overcome as they continue to navigate through uncertainty. The following is taken directly from that recently published data:
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Inflation is, by far, the top concern for small businesses this quarter, according to new data from the MetLife & U.S. Chamber of Commerce Small Business Index survey taken January 14 – 26, 2022. Small businesses also expressed high levels of concern over supply chain disruptions. While these were key challenges cited in Q4 last year, concerns around inflation and supply chains have intensified.
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Both issues are forcing small businesses to find ways to improvise and deal with an environment where increasing prices and supply chain headaches are the norm, at least for the foreseeable future. Some small businesses are reacting by raising prices or altering their supply chains.
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One in three (33%) small businesses now rank inflation as the biggest challenge facing the small business community (up 10 percentage points from Q4 2021) and up 14 percentage points from Q3 of last year.
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More than eight in ten (85%) small business owners or decision makers are concerned about the impact of inflation on their business and almost half (44%) indicate they are very concerned (up 13 percentage points since Q4 2021). Three in four small businesses find managing higher costs due to inflation difficult (76%) and say rising prices have had a significant impact on their business in the past year (74%).
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To cope with rising inflation small business owners are adjusting, most often by raising the prices for their goods and services. A strong majority (67%) of small businesses report having to raise their prices over the past year. Another four in ten (41%) report having decreased staff or taken out a loan in the past year (39%) in response to growing inflation pressures.
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Small businesses in the retail sector are the most likely sector to report increasing the prices of their goods and services (80%) compared to those in professional services (68%), manufacturing (65%), and services (56%).
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Small businesses with 1-4 employees and 5-19 employees also rank inflation as the top challenge—while small businesses with 20-499 employees rate it as a top-tier concern alongside COVID-19 protocols and supply chain issues. It is also among the biggest concerns in all four regions of the country. Finally, across sectors, those in the manufacturing (41%), services (35%), retail (32%) and professional services (29%) sector all cite inflation as one of the top challenges facing the small business community.
- After inflation, supply chain issues (26%), along with COVID (24%), are the next biggest concerns for small business owners this quarter. More small business owners (26%) now cite supply chain issues as their biggest problem, up eight percentage points from Q4 2021. (As noted above, 33% said inflation is their biggest concern). The vast majority (76%) of small businesses are concerned about the impact supply chain disruptions are having on their business.
-Written by Kevin Sawyer
