Small business owners nationwide are reporting that inflationary pressures are hurting their bottom line and adversely affecting their ability to hire and retain workers, according to new survey data of small business owners from Goldman Sachs 10,000 Small Businesses Voices. Fully, 91% of small business owners say broader economic trends, such as inflation, supply chain issues, and workforce challenges, are having a negative effect. Further, nearly 73% of all small business owners said increasing energy costs are having negative impacts on their bottom lines.
The health of the economy is another worry, as 56% of small business owners say the economy has worsened since January 2022. And while hiring and retaining qualified workers remains the top challenge cited by small business owners, concern for inflationary pressures have increased over the last few months; 88% said inflationary pressures on their business have increased since January 2022. Previous worries have not abated: over that same period, 80% said supply chain challenges worsened or stayed the same and 88% said hiring challenges worsened or stayed the same. Only 5% believe both inflation and supply chain challenges will subside within the next six months.
“More than two years since the start of the pandemic, small businesses are still facing incredible challenges. Inflation and supply chain problems are taking a toll on Main Streets here in New Hampshire and across America,” said Toutou Marsden, owner of Dell-Lea Weddings & Events in Chichester. “Washington did its part to help small businesses through the worst of this pandemic. Now, it’s really important that policymakers take steps to better tailor programs and services so that more small businesses have the tools they need to succeed. That will make our country, our communities, and our families stronger, and it will give more small business owners the chance to get ahead.”
Inflation has contributed to workforce challenges, as the high costs of attracting and retaining employees is affecting small businesses’ bottom lines and ability to do business, according to the survey. 80% of small business owners say their business’ financial health has been negatively impacted by inflation over the past six months. Of those, 67% have increased wages to retain employees, while 61% have increased wages to attract new employees. To offset these increased costs, 60% have passed them through to the consumer by raising the prices of goods or services.
Small business owners believe it is a tale of two recoveries. 88% of respondents say small businesses are struggling relative to larger companies in their local communities. The feeling of a recovery favoring big business goes deeper, with:
- 42% reporting they have lost employees to larger businesses that are paying more
- 65% of businesses impacted by supply chain challenges saying it is a problem for their business that suppliers are favoring large businesses over small businesses
- 70% worry about employees leaving their businesses because larger businesses can offer higher pay and more generous benefits
Small business owners believe Congress can better support small businesses with more modern programs. 86% believe the federal government should do more to level the playing field so small businesses are better able to compete with larger companies, while 93% say the federal government should do more to tailor programs and services to better reflect the realities and needs of small businesses.
“Small businesses are sending a clear signal that the economy and the challenges they face – like inflation, workforce, supply chain and energy costs – are going from bad to worse,” said Joe Wall, National Director of Goldman Sachs 10,000 Small Businesses Voices. “It has been twenty-two years since Congress reauthorized the Small Business Administration. With small businesses struggling to compete with larger companies and suffering setbacks as they recover from the pandemic, it is time to modernize the Small Business Administration through reauthorization to meet the challenges of today’s economy.”
This data is based on a survey of 1,107 Goldman Sachs 10,000 Small Businesses participants conducted by Babson College and David Binder Research from April 11-14, 2022. The survey included small business owners from 48 U.S. states and two U.S. territories.