There’s been some good news for small businesses as the MetLife and U.S. Chamber of Commerce Small Business Index reached a pandemic-era high during the last quarter.
The Small Business Index score for the last quarter is 63.0, which is the highest Index score since the beginning of the Coronavirus pandemic. To compare, the previous quarter’s score was 56.6, with the lowest pandemic-era score plummeting as low as 39.5. That low point was the second quarter of 2020 when things were looking especially bleak for small businesses.
US Chamber of Commerce Small Business Confidence Index Hits Pandemic Era High
Despite the optimism of the higher Index score, the US Chamber report notes that the sentiment of small business owners and the Index score have been fluctuating more than usual over the last year. This likely indicates that small businesses continue operating in the face of uncertainty as the evolving pandemic situation makes planning for the future difficult.
Small business owners also expressed concerns regarding supply chain constraints and worker shortages, although increasing inflation was their primary concern. The report states that most small businesses cite inflation as a major concern, with the most common way of compensating for it being to raise the prices they charge customers.
While nearly three quarters of small business owners are worried about inflation, a similar figure (71%) is equally concerned about the impact their raised prices will have on their business.
Small Business Optimism Grows
While the uncertainty of the future isn’t exactly an ideal situation for small business owners, it seems that many do see a light at the end of the tunnel and their hopes for the future are more optimistic than they have been for some time.
The report gathered information on the reasons behind the growing optimism, saying: “Hiring and investment plans, in particular, reveal small businesses’ growing optimism. About two in five (38%) small business owners say they plan to increase staffing levels, while 42% say they plan to invest in their business in the coming year—increases of 10 and 13 percentage points, respectively, from 2021 Q3.
“As small businesses face the future, they see many challenges. A quarter (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.”
Labor Shortages and Supply Chain Issues
The report also reveals that a majority of small businesses view the holiday season as crucial to their bottom line, but labor shortages and supply chain issues may prevent them making the most of this busy time of year.
With 70% of small business owners saying the holiday season is a vital contributor to their yearly profits, nearly half of those surveyed said they were facing a worker shortage. A worrying 60% also said they were expecting supply chain disruptions to make it difficult to maximize their profits at this important time of year.