How Are Small Businesses Doing in 2022?
Author: Siân Killingsworth / 18 Apr 2022 / Business
Small businesses in 2022 are worrying less about last year’s woes—forced closures, employee quarantines, and new health guidelines. Instead they are now concerned about inflation, supply chain issues, and labor shortages. Despite these challenges, small business filings and overall optimism remain high.
Small Businesses Are Growing
It’s not exactly smooth sailing, but small businesses are weathering the storm and cruising forward with optimism in 2022. Even amid the worst stages of economic uncertainty, over 900,000 entrepreneurs in the U.S. stepped up to form new retail small businesses in 2021. Another 77,000 manufacturing and 111,0000 wholesale applications were filed, according to the U.S. Census Bureau. All told, 5.4 million new companies formed in 2021, up from 4.3 million in 2020.
Reasons for Small Business Optimism in 2022
The Small Business Index found that 77% of small business owners are optimistic about their future.
- Confidence – After surviving overwhelming challenges, business owners have been surprised by their own resilience. As we shift to the new phase of living with endemic coronavirus, it seems unlikely we will go into full lockdown mode again.
- Innovation – Innovations like curbside pickup, home delivery service, and remote working have allowed businesses to thrive amid uncertainty. These adaptations are likely here to stay. In the coming year, evolving retail media revenue opportunities will allow small businesses to compete with much bigger ones.
- Customer Support – Americans are eager to support small, local businesses, according to the U.S. Chamber of Commerce. In December 2021, 57% of U.S. shoppers said they planned to “spend more money at small businesses over the next six months to help local employers and enjoy stellar customer service.”
Small Business Challenges in 2022
Small businesses have big growth planned, but have trouble meeting objectives when funds, supplies, and personnel are in short supply.
- Inflation – The Clarify Capital survey found that 42% of small businesses cite inflation as their chief worry. Two-thirds say it has become “increasingly problematic” in the first half of 2022. With inflation stuck at a 40-year high, three in five small business owners say they’ve had to raise prices this year, according to the Small Business Index. Some have decreased staff or taken out loans to manage the higher cost of raw materials.
- Supply Chain Issues – A Goldman Sachs survey found 69% of small business owners have supply chain issues that negatively impact their bottom line. Most respondents feel suppliers are favoring larger volume clients. Two in three small businesses have had to alter their supply chains over the past six months, according to the U.S. Chamber of Commerce. They expect supply chain issues to persist for at least six months.
- Labor Shortages – People understand that they hold the upper hand in the labor market. As record jobs are created, workers are dropping out of the market to care for a loved one or retire early. Finding and retaining top talent is difficult for 87% of small businesses. Unfilled positions are hurting the bottom line for 97%, according to Goldman Sachs.
Looking to Make Your Small Business Even Better in 2022?
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