Goldman Sachs Survey: Small Business Owners Slowed by Inflation and Recession
According to new results from a survey of 1,479 participants in Goldman Sachs 10,000 Small Businesses, 86% of small business owners say they plan to vote in the next election, with 91% saying the political positions of ‘a candidate on small businesses will play an important role in their choice. sustain.
“As we continue to face unprecedented headwinds brought on by the pandemic, small business owners across the United States and across parties are motivated to support elected officials who put small businesses and people first. unique challenges we face,” says Hana Abboud, owner of L’amour Bridal in Dearborn and an alumnus of the Goldman Sachs 10,000 Michigan Small Businesses cohort.
Some 81% of survey respondents said they were more likely to support a candidate who pledges to reauthorize the SBA. The SBA was reauthorized seven times by Congress between 1980 and 2000, but has not been reauthorized since.
“Reauthorizing and modernizing the Small Business Administration is high on our list. It has been 22 years since Congress last reauthorized the Small Business Administration, and business practices and realities have undergone a dramatic shift since then,” says Abboud.
Small business owners also remain concerned about an economic recession, with 43% believing the US economy is already in recession and 62% anticipating a recession next year.
In turn, 54% of respondents report a drop in customer demand in recent months, 46% have put expansion plans on hold, and 29% cite difficulties in raising capital and higher borrowing costs. . However, only 16% of small businesses report a hiring freeze.
Inflation continues to worsen for small business owners, with 77% of respondents saying inflationary pressures have increased over the past three months and 19% saying they have remained the same.
Seventy-five percent say inflation has hurt their company’s financial health over the past six months. Worryingly, 83% of small business owners say they are concerned that their customers will switch to larger companies given their ability to better withstand inflationary pressures and potentially offer more competitive pricing.
It comes as 68% of respondents say they have raised the prices of their goods or services to offset the negative impact of broader economic trends. Overall, 88% believe that small businesses are struggling compared to large businesses.
“Small business owners continue to be hampered by inflationary pressures and difficulty in hiring skilled workers – challenges that small business owners perceive to be getting worse as larger companies are able to absorb the pressures. inflationary and deliver more lucrative employee benefits in ways they simply can’t do,” says Joe Wall, country director of Goldman Sachs 10,000 Small Businesses Voices. “Congress must prioritize reauthorizing from the Small Business Administration to put small businesses on a stronger footing to compete with big business.”
Recruiting and hiring workers remains the biggest challenge for small business owners, and many say they are unable to compete with larger companies for skilled workers. While 50% said hiring challenges have remained the same since their last survey three months ago, 36% say hiring challenges have worsened.
Seventy-three percent of small businesses facing hiring challenges cite competition with larger employers for compensation and benefits as their biggest barrier, with 59% of those who are hiring saying they need to more than two months to hire a qualified employee.
Macroeconomic conditions are worsening the benefits gap with 59% of small businesses reporting that their benefits spending in 2022 has increased compared to 2021, and 49% reporting that their benefits spending has increased by more than 11%. %.
The new survey also includes encouraging news: The percentage of small business owners who say they believe the country is headed in the wrong direction has fallen 10 percentage points in the past three months, from 61% in June to 51%. in the current investigation. . Twenty-nine percent say the country is moving in the right direction, up from 19% in June.
The survey was conducted by Babson College and David Binder Research from August 29 to September 1. The survey included small business owners from Michigan, 46 other US states, Washington, DC and Puerto Rico.