PROTECTING SMALL BUSINESS, PROMOTING ENTREPRENEURSHIP

SMALL BUSINESS PULSE SURVEY: Troubling Trends Among Business Owners

By at 22 April, 2022, 10:16 am

by Raymond J. Keating – 

The latest Small Business Pulse survey from the U.S. Census Bureau points to some key challenges getting tougher for small businesses.

Labor Shortages

For example, when asked about having difficulties hiring paid employees, results from April 11-17 came in at 33.4 percent saying they had such difficulties, with 30.4 percent saying they didn’t and 36.2 percent answering not applicable. At the start of the year, 28.2 percent said they had difficulties, with 28.6 percent saying they did not and 43.2 percent not applicable.

This is a good news-troubling news result.

First, apparently a larger share of small businesses are seeking to hire, but a larger percentage are having difficulties doing so. The tight labor market persists, and might be worse compared to the start of 2022.

Supply Chain Challenges

As for supply chain problems, during the April 11-17 period, 44.5 percent of small businesses said they faced domestic supplier delays and 19.2 percent foreign supplier delays. That compared to 42.4 percent and 17.4 percent, respectively, at the start of the year. So, we see a slight worsening problem for small businesses in terms of supply chain matters.

Finally, regarding expectations, things haven’t changed all that much from the start of 2022.

Responding to the question “how much time do you think will pass before this business returns to its normal level of operations?” in early January 2022, 8.6 percent said 4-6 months and 36.6 percent said more than 6 months. As of April 11-17, there was improvement, but not very much, with 7.4 percent saying 4-6 months and 32.6 percent saying more than 6 months.

Source: Small Business Pulse Survey, April 11-22, 2022, U.S. Census Bureau

Inflation and Higher Prices

Of course, inflation is a top small business concern and its impact is made clear in the latest and past surveys. In the recent survey, an average of 40.6 percent of small businesses report large price increase compared to 6 months ago, and 38 percent report moderate price increases. That amounts to 78.6 percent of small businesses reporting increases.

At the start of the year, 35 percent reported large price increases and 40.7 percent reported moderate increases, for a total of 75.7 percent.  That first data point, where we see a +5 percent increase in those reporting large price increases, is alarming. Given tight margins, tough competition, supply chain challenges and other uncertainties, many small businesses will not be able to endure the cumulative effect of these large price increases.

Back to Normal Operations? 

Here’s another trend that warrants watching. At the start of 2021, 7.1 percent said “I do not believe this business will return to its normal level of operations.” That increased slightly to 7.4 percent in mid-April 2021. However, it rose to 12.3 percent at the start of 2022, and came in at 12.8 percent during April 11-17, 2022. That’s one of the most troubling trends in this set of polling questions about the state of small businesses.

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.

 

 

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