American small-business owners are pessimistic about future economic conditions as inflation weighs down on their operations, according to the latest survey by the National Federation of Independent Business (NFIB).
“Inflation and worker shortages continue to be the hardest challenges facing small-business owners,” said NFIB Chief Economist Bill Dunkelberg. “Even with these challenges, owners are still seeking opportunities to grow their business in the current period.”
Among respondents who reported lower profits, 42 percent attributed the situation to the rising cost of input materials, 21 percent cited weaker sales, 12 percent blamed labor costs, 8 percent felt it was lower prices, 6 percent cited usual seasonal change, and 3 percent believed high taxes and regulatory costs to be the culprit.
Price hikes were seen the most in the retail sector, followed by construction, transportation, and wholesale. A net 31 percent of business owners plan on raising prices.
Inflation Eating Into ProfitsThe quarterly MetLife and U.S. Chamber of Commerce Small Business Index report released last month found that 90 percent of small businesses were concerned about how inflation would affect their business.
Half of the respondents cited inflation as the biggest challenge, with 71 percent believing the worst is yet to come.
A report by Kabbage, a lender owned by American Express, has found that overall profits in the small-business sector declined between July 2021 and July 2022. While revenues of small businesses rose by 87 percent during this period, overall profits actually declined by 4 percent.
The report notes that 75 percent of respondents admitted to being affected by inflationary pressures, with 56 percent expecting such pressures to last at least until summer 2023.