In this study by SCORE, we asked a large sample of small business owners how they felt about the current economy and inflation, how turbulent economic factors have affected their profitability, and what they have done to protect their businesses in response. Part 1: The Economy, Inflation and Pricing – explores current business owner sentiment about the economy, inflation and pricing. Part 2: Business Impact and Resolve – asked small business owners how they’re managing profits, sales and expenses in the current economy, and their response to business challenges to stay profitable.
Key research findings include:
Part 1: The Economy, Inflation and Pricing
- Getting customers remains the top challenge for small business owners but cash flow, inflation and supply chain disruptions are growing concerns.
- Most business owners are worried about inflation. 30.5% list inflation as a top concern and another 62.5% are generally concerned as they keep an eye on rising prices.
- Due to continued economic uncertainty, three out of four business owners (76.4%) report feeling ambivalent about the economy – either somewhat positive, somewhat negative or neutral.
Part 2: Business Impact and Resolve
- Many small business owners (62.7%) have seen their profits decline over the past six months. Only 15.5% reported profits were higher than expected.
- Profits are declining because sales have declined for 58.6% of small business owners surveyed, and expenses have risen for 59.5%, compared to six months ago.
- Vendors and suppliers are charging 65.7% of business owners more than they were six months ago. More than half of business owners (53.5%) now pay more for utilities (including gas).
- Rising costs cause cash flow problems for one-third (35.9%) of the small business owners surveyed.
- To improve profitability, some small business owners are seeking more profitable clients, some are adjusting their product mix or improving technology, most are raising prices.
- 54.8% of business owners found it necessary to increase prices to match price increases in the market. All but 7.8% of those surveyed have raised prices by 5%-20%, with an average increase of 11%.