WASHINGTON–Inflation is the dominating challenge facing small business, according to the Small Business Index from MetLife and the U.S. Chamber of Commerce.
The Index found that 88% of small business owners are concerned about the impact of inflation on their businesses. Nearly half (49%) are very concerned, compared to 44% last quarter and rising from 31% in Q4 2021.
“Historic inflation is top-of-mind and deeply troubling to small businesses right now,” said U.S. Chamber of Commerce Vice President of Small Business Policy Tom Sullivan. “But at the same time, there is confidence among small business owners that customer demand will remain strong, and this quarter’s Index shows they want to hire and plan on meeting that demand in the coming months.”
Despite the sharp increase in concern around inflation and ongoing economic uncertainty, the Small Business Index ticked up 2.7 points to reach a new pandemic-era high score of 66.8, according to the organizations. The Index’s rise comes from its unique focus on individual small business circumstances, with less weight assigned to attitudes on the broader economy.
Better Health
“For instance, two in three small business owners say their business is in good health, a five-point increase from last quarter and on par with pre-pandemic Q1 2020. Two-thirds (66%) say they expect revenue to increase over the next year, and 43% plan to hire more staff, the highest number recorded in the past two months.”
Meanwhile, the Index found, there has not been any improvement in how small businesses view the overall economy. About half (49%) say the U.S. economy is poor, consistent with the last few quarters. Less than one in three (30%) say the overall U.S. economy is good. Slightly more (37%) rate their local economy as good, according to the Index’s findings.
Additional Findings:
Additional findings in the Index include:
- Small business owners see more competition and red tape. When comparing current conditions to six months ago, small businesses report higher levels of competition (39% vs. 30% last quarter), and say they are spending more time on licensing, compliance, or other government requirements (37% vs. 29% last quarter).
- Raising the prices of products or services is how most small businesses say they are coping with inflation (69%), followed by taking out a loan (46%) and decreasing staff (35%).
- 53% of small business retailers say inflation is a top challenge, significantly above other sectors, and up 21 percentage points compared to last quarter.
- Hiring woes remain. Over half (55%) of small businesses express concern over filling empty roles. 54% are concerned about retaining employees.
- Four in 10 small business owners say they are still offering employees a hybrid work environment. Of those, 54% plan to continue to offer it indefinitely.
- 50% of small business owners say they are working more hours now than they were a year ago. Just 30% said the same the last time this question was asked in 2017.