As times become ever more challenging for everyone, especially for small businesses, severe challenges continue to arise that could threaten the survival of many small companies. Is your company poised to see the challenges and respond to them so that your business emerges that much stronger? In some recently published data, the US Chamber of Commerce and Met Life have taken the pulse of hundreds of small businesses across the country to see what challenges continue to remain. The following is taken directly from their recent report:
- This quarter, more than two in five (44%) indicate inflation is the top challenge facing the small business community, an 11-percentage point increase from Q1 2022 and a 21-percentage point increase from Q4 2021. Supply chain issues (28%) and revenue (22%) remain in the top three, but they are now in a distant second-tier behind inflation.
- Nearly nine in ten small businesses (88%) are concerned about the impact of inflation on their business, with almost half (49%) indicating they are very concerned (up from 44% in Q1 2022 and 31% in Q4 2021). The share of small businesses that report rising prices have had a significant impact on their business continues to rise—up to 80% this quarter compared to 74% in Q1 2022.
- Sixty-nine percent of small businesses surveyed report raising the prices of their products or services due to inflation in the past year. This is consistent with the 67% that reported raising their prices due to inflation last quarter. Nearly half (46%) report having taken out a loan to cover higher costs due to inflation (up from 39% in Q1 2022). While inflation continues to impact small businesses, fewer now say they have decreased staff to cope with higher prices than in Q1 2022 (35% vs. 41%).
- Responses to inflation vary somewhat by sector and region. Those in the services sector are the least likely to report raising prices to offset rising costs. They are also less likely to report having laid off staff in response to rising prices (25%) than professional services (45%) and manufacturing small businesses (39%). Professional service (62%) and manufacturing (59%) small businesses, on the other hand, are more likely than retail (37%) and services (29%) small businesses to have taken out a loan in response to inflation.
- Following the Federal Reserve’s decision to raise interest rates in March and May (as this poll was in the field), nearly three-quarters of small businesses (74%) report being concerned about the impact of rising interest rates on their business.
- Half (50%) of small businesses say they believe it will be another six months to a year until the U.S. small business climate returns to normal, and fewer than one in ten (6%) say that it already has.
- The most popular options for recruiting and retaining workers are to offer flexible work schedules and higher wages. Roughly a third of small businesses report offering employees greater flexibility (34%) and increased wages (33%) over the past year to improve retention and attract new talent.
- Over that time, one key finding stands out: Half (50%) of small business owners say they are working more hours now than they were a year ago. This question was first asked in the inaugural SBI (Q2 2017). In the pre-pandemic world, five years ago, 30% said they were working more hours. This equates to a 20-percentage point increase2 in the share of small business owners that report working more hours.
-Written by Kevin Sawyer