According to a new Goldman Sachs 10,000 Small Business Voices survey of its members, Michigan and national small business owners are struggling with inflationary pressures that are affecting their bottom lines and hobbling their ability to hire and retain workers.
The survey showed that 91 percent of small business owners say broader economic trends, such as inflation, supply chain issues, and workforce challenges, are negatively affecting their business. Additionally, 73 percent of all small business owners across all sectors said increasing energy costs are hurting their bottom lines.
Michigan has 902,121 small businesses and 1.9 million small business employees – which represents 48.3 percent of the total employees in the state.
“Small business owners are stuck between a rock and a hard place as inflation and an uneven economic recovery are impacting every part of our businesses with no end in sight,” says Jeremy Westcott, a member of Goldman Sachs 10,000 Small Businesses Voices and general manager of Environmental Testing and Consulting in Romulus.
“Small business owners need policymakers to understand that while most businesses have fully reopened since the pandemic, the road to a full recovery will be long — with new challenges around every corner.”
The health of the economy is also adding to the worries of small business owners, 56 percent of whom say they believe the economy has worsened since January 2022. And while hiring and retaining workers remains the top challenge cited by small business owners, concern for inflationary pressures have increased over the last few months — 88 percent saying inflationary pressures have increased since January 2022.
Concerns that have troubled small business owners for months have also not receded: 43 percent said supply chain challenges worsened and nearly half (48 percent) said hiring challenges worsened. Only 5 percent said they believe both inflation and supply chain challenges will subside within the next six months, with inflation continuing to contribute to workforce challenges. According to the survey:
- 67 percent of respondents have increased wages to retain employees.
- 61 percent have increased wages to attract new employees.
- 60 percent have passed increased costs to the consumer by raising the prices of goods or services.
Small business owners believe it is a tale of two recoveries. 88 percent of respondents say small businesses are struggling relative to larger companies in their local communities. The feeling of a recovery favoring big business goes deeper, with:
- 42 percent reporting they have lost employees to larger businesses that pay more.
- 65 percent of businesses impacted by supply chain challenges say it is a problem for their business that suppliers are favoring large businesses over small businesses.
- 70 percent worry about employees leaving their businesses because larger businesses can offer higher pay and more generous benefits.
Small business owners believe Congress and the federal government can better support small businesses with more modern programs that help them compete with larger companies.
“Small businesses are sending a clear signal that the economy and the challenges they face — like inflation, workforce, supply chain and energy costs — are going from bad to worse,” says Joe Wall, national director of Goldman Sachs 10,000 Small Businesses Voices.
“It has been 22 years since Congress reauthorized the Small Business Administration. With small businesses struggling to compete with larger companies and suffering setbacks as they recover from the pandemic, it is time to modernize the Small Business Administration through reauthorization to meet the challenges of today’s economy.”
This data is based on a survey of 1,107 Goldman Sachs 10,000 Small Businesses participants conducted by Babson College and David Binder Research from April 11 to 14, 2022. The survey included small business owners from 48 U.S. states and two U.S. territories.
Goldman Sachs and The Goldman Sachs Foundation launched the 10,000 Small Businesses initiative to help small businesses in the U.S. create jobs and economic growth by providing entrepreneurs with a practical business education, business support services, and access to capital.
In Michigan, 10,000 Small Businesses partners with Wayne State University, Macomb Community College, and Oakland Community College to deliver the program. More than 625 Michigan business owners have completed the program.
Michigan small business owners can apply at www.10KSBapply.com.
To access the survey, click here.