Small Business Index Hits Pandemic High Note as Staffing and Investing Prospects Increase, but Supply Chain Issues and Inflation Still Top Concerns
The MetLife and U.S. Chamber of Commerce Small Business Index reached a pandemic-era high this quarter as many small businesses reported seeing a brighter future.
Indeed, as 2021 comes to a close, 77% of small business owners say they are optimistic about the future of their business, according to the index.
In addition, as they begin to catch a glimpse of a post-pandemic world, small business owners are showing higher optimism for the year ahead, especially when it comes to their staffing and investment plans. Reflecting that optimism, 38% of small businesses anticipate increasing their headcount next year, an increase from last quarter, which stood at 28%, and the highest mark for this measure since the SBI launched in Q2 2017.
In addition, 42% say they plan to increase their invest in their business in the coming year — an increases from 29% last quarter, the SBI shows.
However, while expectations for the future are higher, there are still concerns. Chief among them are increasing inflation, supply chain constraints and talent shortages.
The SBI notes that 26% of small business owners say the biggest challenge they expect to face in a post-pandemic world is revenue, with inflation (23%) and COVID-19 compliance (21%) seen as other top issues.
The most common way of dealing with inflation is raising the prices they charge customers, with 74% of small business owners being concerned about the impact of inflation on their business, and 71% saying rising prices have had a significant impact on their business in the past year.
To manage higher costs caused by inflation, 63% of small businesses say they have increased the prices of their products or services in the past year, while 45% say they have taken out a loan, and 41% say they have decreased staff.
Most small businesses say their supply chains have been disrupted by the pandemic and worker shortages, according to the report. Sixty-one percent of small businesses say the COVID-19 pandemic has dramatically disrupted their supply chain, and 55% say worker shortages have caused dramatic disruptions. As a result, 63% say they have had to alter their supply chains in the past six months, and 47% say the disruptions make it difficult to keep up with customer demand.
“Client demand has tripled from this time last year,” Julianne Weiner, COO Sonic Promos, said in the report. “We talk about how dealing with incoming requests is like trying to take a sip from a fire hose. With our current team past capacity, we recently hired some new staff, which actually has everyone struggling — training and delegating effectively requires its own type of focus and attention. However, we know these challenges will add to our collective strength once we all get past the learning curves.”
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