Goldman Sachs Survey: Small Business Owners Slowed by Inflation, Recession

According to new survey results of 1,479 Goldman Sachs 10,000 Small Businesses participants, 86 percent of small business owners say they are planning to vote in the upcoming elections, with 91 percent saying a candidate’s small business policy positions will play an important role in who they choose to support.
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A road sign reminds Victorians to support local business doing it tough in Toorak Village, Melbourne, Victoria, Australia, on 6 June 2021. It's the first day out of coronavirus lockdown and small businesses have really struggled to survive due to the economic harm caused by the covid-19 restrictions.
Small business owners feel they are at a disadvantage compared to big businesses when facing inflationary and hiring difficulties. // Stock Photo

According to new survey results of 1,479 Goldman Sachs 10,000 Small Businesses participants, 86 percent of small business owners say they are planning to vote in the upcoming elections, with 91 percent saying a candidate’s small business policy positions will play an important role in who they choose to support.

“As we continue to face unprecedented headwinds brought on by the pandemic, small business owners across the U.S., and across party lines, are motivated to support elected officials who prioritize small businesses and the unique challenges we face,” says Hana Abboud, owner of The L’amour Bridal in Dearborn and an alum of the Goldman Sachs 10,000 Small Businesses Michigan cohort.

Some 81 percent of survey respondents said they are more likely to support a candidate who pledges to reauthorize the SBA. The SBA was reauthorized by Congress seven times between 1980-2000, but has not been reauthorized since.

“Reauthorizing and modernizing the Small Business Administration is at the top of our list. It has been 22 years since Congress last reauthorized the Small Business Administration, and business practices and realities have undergone a sea change since then,” Abboud says.

Small business owners also remain concerned about an economic recession, with 43 percent believing the U.S. economy is already in a recession, and 62 percent anticipating a recession in the next year.

In turn, 54 percent of respondents report a decline in customer demand over the past few months, 46 percent paused expansion plans, and 29 percent cite difficulty raising capital and higher borrowing costs. Only 16 percent of small businesses, however, are reporting a hiring freeze.

Inflation continues to worsen for small business owners, with 77 percent of respondents saying inflationary pressures have increased over the past three months and 19 percent saying they have stayed the same.

Seventy-five percent say inflation has negatively affected their business’ financial health over the past six months. In a worrisome sign, 83 percent of small business owners say they are concerned their customers may turn to bigger companies given their ability to better withstand inflationary pressures and potentially offer more competitive pricing.

This comes as 68 percent of respondents say they have raised the prices on their goods or services to offset the negative impact of broader economic trends. In general, 88 percent believe small businesses are struggling compared to bigger businesses.

“Small business owners continue to be hobbled by inflationary pressures and difficulty in hiring qualified workers — challenges which small business owners only perceive as becoming worse as larger companies are able to absorb inflationary pressures and offer more lucrative benefits packages in a way they simply can’t do,” says Joe Wall, national director of Goldman Sachs 10,000 Small Businesses Voices. “Congress must prioritize the reauthorization of the Small Business Administration to put small businesses on stronger footing to compete with larger businesses.”

Recruiting and hiring workers remains the top challenge for small business owners, with many reporting they are unable to compete with bigger companies for qualified workers. While 50 percent said hiring challenges have remained the same since they were last surveyed three months ago, 36 percent say hiring challenges have worsened.

Seventy-three percent of small businesses experiencing hiring challenges cite competition with larger employers on pay and benefits as their biggest impediment, with 59 percent of those hiring reporting that on average, it takes them more than two months to hire a qualified employee.

Macro-economic conditions are worsening the employee benefits gap with 59 percent of small businesses saying their 2022 employee benefits expenses increased compared with 2021, and 49 percent saying their benefits expenses increased by more than 11 percent.

The new survey also includes some encouraging news: The percentage of small business owners who say they believe the country is moving in the wrong direction has declined 10 percentage points over the past three months, from 61 percent in June to 51 percent in the current survey. Twenty-nine percent say the country is moving in the right direction, climbing from 19 percent in June.

The survey was conducted by Babson College and David Binder Research from Aug. 29 to Sept. 1. The survey included small business owners from Michigan, 46 other U.S. states, Washington, D.C., and Puerto Rico.

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