For months, small business owners cited the lack of available workers as the biggest problem they faced.
There is a new biggest problem: inflation.
That’s according to the National Federation of Independent Businesses Optimism Index for March 2022. NFIB chief economist Bill Dunkelberg said that in March, 31% of small business owners said inflation was their biggest problem. That is an increase of 5% compared to February.
Small business pessimism on the rise
The optimism figure for small business owners fell 2.4 points to 93.2 from February to March. That’s well below the NFIB’s 48-year average optimism score of 98.
Owners expecting better business conditions over the next six months fell 14 points to a net negative 49%, the lowest level recorded in the 48-year survey. Forty-seven percent of owners reported unfilled vacancies, down one point from February.
The net percentage of owners who increased the average sale price increased by four points to a net 72% (seasonally adjusted), the highest value in the history of the study.
Inflation impact Key points to consider
Staff shortages and supply chain disruptions have contributed to the concerns of small business owners.47% of entrepreneurs say that vacancies cannot be filled. Most of those openings are in transportation, manufacturing and construction. Entrepreneurs in those sectors are optimistic that the jobs can be filled seasonally. 72% of the entrepreneurs say they will have to raise prices. The majority of these entrepreneurs are active in wholesale, construction or agriculture, or in the retail sector. 40% of entrepreneurs cite supply chain disruptions as a problem. 23% was the average annual rate for open job openings during the NFIB’s 48-year history of studying small business economic trends.
How do companies deal with inflation?
Inflation has not been completely sudden. In 2021, the cost of products and services increased by 3-4%. And in 2022, small business owners report that their total operating costs have increased by an average of 20%. Their profit margins have fallen sharply.
What are they doing?
Implement cost-saving measures – They do their best to reduce utility costs and sometimes less hours. According to the Biz2Credit Lending Index for March, they also borrow to buy needed supplies when those supplies are available “to hedge against shortages.”
Raising Prices – As profit margins are getting tighter, there is no other solution. Small business owners strive to keep customers happy because they are forced to increase the cost of goods and services.
This post NFIB Says Small Business Owners See Inflation As The Biggest Problem was original published at “https://smallbiztrends.com/2022/04/inflation-major-concern-small-business-nfib-survey-april-2022.html”