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What a year of surveys say about the economic conditions facing small businesses

Posted by Kanika Sinha

March 22, 2022    |     5-minute read (872 words)

The prolonged COVID-19 pandemic brought about countless challenges to the small business world, impacting companies across every sector. While over 100,00 small businesses in the U.S. were forced to shut down due to the pandemic, thousands of others survived but were pushed to the brink.

In short, it hasn't been easy for small businesses — hiring difficulties, market uncertainty and supply chain headaches persisted throughout 2020 and 2021. And even in 2022, it feels a bit like Groundhog Day in the world of small businesses, according to an array of new surveys.

Here’s a look, via recent surveys of small business owners, at how they’re doing as we head toward a post-pandemic world.

The topmost need

The U.S. Census Bureau’s Small Business Pulse Survey sheds light on the most pressing need as identified by small business owners. Comparing the data from two time periods — early March 2021 and early March 2022 — the survey report outlines the following:

• A 36% increase in the share of small businesses citing “identify and hire new employees” as their top need.

• The share of small businesses pointing to “identify new supply chain options” as their top need increased exponentially by 89%.

The leading challenges 

Hiring difficulties and rising costs have topped the charts of small business challenges for months now and are not likely to ebb in coming months. Recent survey data from the Federal Reserve’s Small Business Credit Survey, the Census Bureau’s Small Business Pulse Survey, the National Federation of Independent Business(NFIB), Alignable and Thumbtack echo the same findings.

Here’s a deeper look at small business challenges per the surveys:

Continuing hiring difficulties

• Nearly 31% of small businesses in the Census Pulse survey expressed they were experiencing difficulty in hiring paid employees.

• In NFIB’s February Small Business Economic Trends, 48% of respondents reported they had job openings they couldn’t fill. According to the report, this figure was far higher than the 48-year historical average.

• Nearly 65% of small businesses in Alignable’s survey indicated difficulties in finding and hiring employees.

• Thumbtack’s survey found that during December 2021, 50% of the small business owner respondents who were trying to fill positions had trouble doing so.

• The Small Business Credit Survey, fielded by multiple Federal Reserve Banks during September through November of 2021, found that 60% of small businesses cited “hiring or retaining qualified staff” as their top operational challenge.

Hiring thaw unlikely

There have been modest improvements on the employment front as reported by the Census Pulse survey. From mid-December 2021 through mid-January 2022, the share of small businesses saying their number of employees had plunged in the previous week rose from 10% to 14%, but the omicron variant weighed on payrolls and engendered a fall in the share back to 10%.

Further, Indeed Hiring Lab’s March 2022 Job Search Survey examined the reasons why jobless employees are not actively or urgently searching for work. It found child care responsibilities to be the biggest reason cited by women for not urgently seeking employment. This clearly indicates that the hiring crunch is not likely to improve any sooner, at least not until other prevailing factors get better.

Higher costs

• In Alignable’s survey, 71% of respondents reported paying higher salaries in February.

• A net 68% of small business owners in the NFIB survey reported marking up their average selling price.

• In Thumbtack’s survey conducted in December 2021, nearly 60% of respondents reported they expected to raise their prices in the first quarter, meaning now.

Rising inflation

In March 2021, a mere 3% of respondents in the NFIB survey considered inflation as their single biggest problem, but that number jumped to 26% in its latest report. Additionally, 40% of Alignable respondents cited inflation as their biggest concern, with nearly two-thirds saying that they’re passing higher costs along to customers. 

Persistent supply chain headaches 

Sixty percent of small businesses in the Small Business Credit Survey cited supply chain issues as their top operational challenge. The Census Pulse survey also corroborates the jump in the supply chain’s prominence in regard to small business challenges. While 29% of small businesses reported domestic supplier delays in 2021, today 44% do.

Cause for optimism

The most notable green shoot of improvement in the small landscape appears in the Census Pulse survey: it indicates a shrinking share of small businesses experiencing weekly revenue declines. From mid-December 2021 through mid-January 2022, the share of small businesses experiencing a revenue decrease in the prior week had climbed to 34% from 23%, but that share had fallen to 21% by the first week of March 2022.

The waning impact of the omicron variant is also evident in the findings of Alignable’s survey, which was fielded more recently, from the second half of February to early March 2022. Only 27% of participating small business owners said COVID-19 was significantly impacting their business and 32% reported that the pandemic’s financial impact was declining. 

In addition, Thumbtack’s survey found that 42% of home service professionals planned to invest in their businesses in the first quarter of 2022. This means that they’re making those investments now — and this is certainly good news!

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