Coronavirus has created chaos worldwide. Read on for tips to help you handle this health and financial crisis. Times are tough! We're here to help. Welcome back to Invest in You: Ready. Set. Grow's supplemental Money 101 guide to financial wellness as we navigate the pandemic. Almost two years into the pandemic, small business owners are still facing challenges, including revenue declines, inflation, and labor shortages.
Yet, they are also feeling confident: 77% reported being optimistic about the future of their business, according to the Small Business Index for the fourth quarter of 2021. The report is compiled every quarter by the U.S. Chamber of Commerce and MetLife.
Meanwhile, small business creation is booming. Last year, new business applications hit a record 5.4 million, according to the Census Bureau.
Today, we'll look at where those opportunities are, as well as the challenges business owners are facing, what they're doing to get by and what aid they feel is still needed from the government.
Thank you for already undertaking your journey to financial wellness. We hope these supplementary lessons help pave the way forward.
Sharon Epperson
CNBC Senior Personal Finance Correspondent
THE STATE OF SMALL BUSINESS The No. 1 concern of small business owners is revenue, the Small Business Index found, followed by inflation.
The consumer price index, which measures what consumers pay for a market basket of goods and services, jumped 7.5% in January compared with a year ago, according to the Labor Department.
Meanwhile, the Producer Price Index, which measures wholesale prices for goods and services, rose 9.7% over the past twelve months through January, according to the U.S. Bureau of Labor Statistics.
This means operators need to increase prices or take a hit on profits. Fully 47% of small business owners have had to raise their prices because of higher input costs, according to the recent CNBC/SurveyMonkey Small Business Survey. Another 32% indicated they will have to raise prices soon if inflation persists. Finding and retaining qualified employees are also big challenges for small businesses right now. Of those currently hiring, 87% are finding it difficult to recruit qualified candidates for open positions and 97% said it is hurting their bottom line, a survey by Goldman Sachs found.
Small businesses, which can't always compete with big companies when it comes to wages, are adding such things as financial benefits and instituting vaccine mandates to stay competitive. Among women business owners who have a vaccine mandate, 31% report having difficulties hiring, compared to 43% of those who don't require a vaccine, a survey by payroll and benefits provider Gusto and the National Association of Business Owners found.  Whether they were part of the "Great Reshuffle," which has workers reevaluating their lives, or lost their jobs during the crisis, entrepreneurs have stepped up to fill needs they've encountered.
Those needs have shifted throughout the course of the pandemic and so has the response by entrepreneurs. In 2020, for instance, new business creation was driven by the retail sector, as businesses adapted to the shift to e-commerce, said Luke Pardue, an economist at Gusto, which services small and medium businesses.
In 2021, there was a tilt towards new business creation in the transportation and warehousing sector, he said.
"With ongoing pandemic-related disruptions, new economic needs and opportunities arising each month, individuals are continuing to meet the moment and create new businesses — a trend that shows no signs of slowing down," Pardue said of the 2022 outlook. "If you look closely, most overnight successes took a really long time." — Steve Jobs While the financial assistance for those impacted by the crisis has ended, some of the hardest-hit industries, including gyms, hotels and restaurants are pushing for more relief. For many, the omicron surge dealt a big blow.
In the restaurant industry, 88% of operators experienced a decline in consumer demand for indoor on-premises dining because of the variant, according to a survey by the National Restaurant Association.
The organization is pushing for the replenishment of the Restaurant Revitalization Fund (RRF), which gave out $28.6 billion in grants during the pandemic. However, there is a remaining $48 billion in pending applications that were shut out and didn't get funding.
Several Democratic House members also recently sent a letter to President Joe Biden calling for more targeted relief for small businesses, including reopening the RRF and the Shuttered Venue Operators Grants. Additionally, they asked for other at-risk sectors centered on in-person gatherings to be made eligible for federal assistance, such as the fitness and travel industries and businesses that offer group activities and indoor recreation.
The fate of any relief is unclear and is sure to find opposition from fiscal conservatives, who will argue that much has been spent already. It's been said that small businesses are the lifeblood of the U.S. economy. There were 31.7 million small businesses in the U.S. as of October, according to the U.S. Small Business Administration, or 99.9% of all firms.
The surge of new business creation during the pandemic is a hopeful sign, said Tom Sullivan, vice president of small business policy at the Chamber of Commerce.
"It's really remarkable," he said. "That leads to the optimism that despite all these headwinds …. that power of innovation, that power of entrepreneurs to solve problems and therefore, create businesses overwhelms the headwinds." Check out CNBC's other newsletters on everything from investing to politics. Subscribe here. |
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