NEW POLL: Small Business Owners Have Dim View of Economy, Most (88%) Believe Recession is Coming

By SBE Council at 24 June, 2022, 1:18 pm

Policy Priorities of President Biden and Congress Do Not Align with Small Business Priorities

FOR IMMEDIATE RELEASE

Washington, D.C. – Small business owners are feeling the heat this summer, as inflation is squeezing their bottom lines and as they anticipate a recession in the months ahead, according to a new Small Business Policy and Economy Survey conducted by TechnoMetrica for the Small Business & Entrepreneurship Council (SBE Council).  Business owners share a dim view of the economy (77%) with 33% saying that economic conditions are “fair,” and 44% reporting “poor” conditions. Nearly all small business owners (88%) are concerned about a recession hitting in the coming year. Only 7% were “unconcerned” about the effects of inflation on their business.

“There’s little breathing room for our nation’s small business owners and their employees. They’ve gone from one set of economic challenges to the next over the past couple of years, and now they are vastly cutting back on spending and investment, which will have a harmful effect across the economy,” said SBE Council president & CEO Karen Kerrigan.

According to the survey, 62% of small business owners report they are cutting back on spending due to higher business costs. The main areas for cuts include: business travel (49%), equipment and technology (48%), new hiring (46%), donations and charity (42%), advertising (41%), marketing/business development (41%), memberships/subscriptions (39%), payroll (25%) and benefits (22%).

“The spending actions and investment decisions of millions of small business owners has a major impact on the health of the economy. The collective pull back on spending and investment will be felt in local economies and at the national level alike,” said Kerrigan.

Issue priorities relate to their pain points.

Not surprisingly, small business owners want President Biden and Congress to focus on their “pain points.”  In terms of priorities, inflation (86%), affordable health coverage (71%), supply chain issues (70%), tax relief and reform/simplicity (68%), cybersecurity (62%), interest rates (60%), the labor shortage and skilled workers (58%) top the list. At the very bottom: regulating and breaking up big technology companies – aka “Big Tech.”

Raymond J. Keating, chief economist at SBE Council, observed, “It’s certainly not surprising that large percentages of small business owners see economic conditions as fair or poor, and are concerned about inflation and the possibility of recession. After all, the latest data and trends, as well as misguided policy responses from President Biden and Congress, warrant real worry. Small business owners are right in prioritizing issues like fighting inflation, and implementing policies that would aid in making health care more affordable and in healing and expanding supply chains, and providing tax relief and reform. Unfortunately, we are seeing the opposite in counter-productive measures like jacking up regulatory burdens and costs, raising taxes, and pushing other punitive and costly measures that target U.S. technology companies.”

Small business owners concerned about the impact of digital regulation on costs, competitiveness, finding and keeping customers, U.S. innovation and investment.

Nearly eight in ten small business owners say that digital tools and platforms are important to their business operations, and 48% believe that potential federal regulation and actions aimed at U.S. technology companies “will have a negative impact on small businesses, thus hurting the economy and its recovery.” Moreover:

● 44% say they will need to start paying for services they currently receive for free.

● 36% believe it will be more expensive to access and retain customers.

● 36% say proposed regulatory actions will harm U.S. investment and innovation.

● 32% think it will be harder for customers to find their businesses.

● 31% believe singling out U.S. companies will give global competitors like China an advantage.

Business owners also expressed concern about the disruption of communications with customers, the erosion or loss of privacy and security protections, difficulty in acquiring new customers, and the disruption of back-office support such as packaging and shipping.

If federal legislative or regulatory actions trigger the imposition of new or higher costs, or if certain digital services were discontinued, 45% of small business owners say larger or more established businesses would benefit, and 24% report their business may be forced to close.  In addition:

● 40% express concern about these higher costs.

● 37% say their business would have a difficult time growing.

● 37% believe they would have less capital to invest in their business.

● 36% say they would not be able to compete with larger or more established firms.

● 35% say their sales will decrease.

● 33% believe their hiring ability would be negatively impacted.

The good news is that 89% of these small business owners believe their businesses will survive, although 28% of these entrepreneurs think they have a “fair” shot at survival. Meanwhile, 7% say their chances of survival are “poor” and 5% were “unsure.”

Kerrigan observed:

“If 7% of small businesses go under, that’s a lot of economic damage. Approximately 2 million small businesses could close. And that is in addition to the economic pain that will be felt as small businesses cut back on spending and hiring.  This all means that it is critical that Congress and President Biden get it right on policy. The currently misguided and damaging activist agenda is bad for all U.S. businesses, but is more keenly felt by our small businesses. The President and Congress must listen to small business owners and their needs, rather than the government-intervention activists who are currently driving the advancement of costly policies.”

The “Small Business Policy and Economy Survey” of 408 small business owners (+/-4.95 percentage points) was conducted June 7-10.  Read the full report here.

CONTACT:

Karen Kerrigan, president & CEO, kkerrigan@sbecouncil.org

Raymond Keating, chief economist, rkeating@sbecouncil.org

SBE Council is nonpartisan advocacy, research and education organization dedicated to protecting small business and promoting entrepreneurship. For more than 25 years, SBE Council has worked on and advanced a range of private sector and public policy initiatives to strengthen the ecosystem for strong startup activity and small business growth. Visit www.sbecouncil.org for additional information. Twitter: @SBECouncil

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