Small business owners across the country are reporting inflationary pressures are hurting their bottom line and adversely impacting their ability to hire and retain workers, according to new survey data of small business owners from Goldman Sachs 10,000 Small Businesses Voices. The survey was of all types of businesses, not just health clubs.
Ninety-one percent of small business owners say broader economic trends, such as inflation, supply chain issues and workforce challenges, are having a negative impact on their business. Seventy-three percent said increasing energy costs are having negative impacts on their bottom lines.
The health of the economy is another worry. Fifty-six percent of respondents said the economy has worsened since January 2022.
Hiring and retaining qualified workers is the top challenge cited by respondent, but concern about inflationary pressures have increased over the last few months. Eighty-eight percent said inflationary pressures on their business have increased since January 2022, while 80 percent said supply chain challenges worsened or stayed the same and 88 percent said hiring challenges worsened or stayed the same during that time.
Eighty percent of small business owners say their business’ financial health has been negatively impacted by inflation over the past six months. Of those, 67 percent have increased wages to retain employees, while 61 percent have increased wages to attract new employees. To offset these increased costs, 60 percent have passed them through to the consumer by raising the prices of goods or services.
Eighty-eight percent of respondents say small businesses are struggling more than larger companies in their communities, with the following sentiments:
- 42 percent report they have lost employees to larger businesses that are paying more
- 65 percent 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 percent worry about employees leaving their businesses because larger businesses can offer higher pay and more generous benefits.
Five percent said that both inflation and supply chain challenges will subside within the next six months.