Fewer and fewer small and medium-sized business owners see the Covid-19 pandemic as their biggest challenge for the rest of 2022.
Just 12%, according to a survey by DHL Express, identified the pandemic as their biggest concern. That pales in comparison to the 61% of respondents who cited supply chain issues, including the resulting inflation, as their top challenge — a figure that rose from 54% a year ago.
“Overall, the survey findings suggest that while the worst of COVID-19 is (hopefully) behind us, issues caused by the pandemic, such as the supply chain delays, talent shortage and inflation are having a lasting effect on U.S. SMEs,” DHL said in a press release announcing the survey.
Supply chain snarls have been a huge contributor to inflation. According to DHL’s survey, 42% of respondents said logistics costs are causing their supply chain problems this year.
It’s leading small-business owners to plan ahead for their supply chain needs, with 31% planning one to three months earlier than they normally would, according to DHL’s survey. Another 34% are planning at least four months earlier.
Separately, a Microsoft Store’s Small Business State of Mind report found 51% of small businesses rank inflation as the biggest threat, followed by Covid at 21% and supply chain shortages at 18%.
Inflation still remains sky-high, according to the Bureau of Labor Statistics, at about 8.3% compared to the same time last year, although that had fallen from 8.5%. Energy price inflation topped 30%, while food prices topped 9.4% over the same time last year.
And that squeeze is putting pressure on small-business owners, according to a new survey from small business network Alignable Inc., which found 33% of U.S. small businesses it surveyed could not pay their rent in full or on time in May, up from 28% in April. That rose to 56% among minority-owned business owners.
Small-business owners pointed to higher rents as one of the primary culprits, with 52% saying that they had to deal with higher rent, compared to 46% in April. Among industries, restaurants struggled the most, with 41% unable to pay their rent in full and on time in May, according to Alignable.
Restaurant owners across the country were hopeful Congress would pass a bill with new Covid-19 relief funding for businesses, especially those in hard-hit industries. Instead, existing legislation that would have provided billions in new funding to replenish the Restaurant Revitalization Fund died in the Senate, and the outlook for additional Covid-19 relief funding is bleak.
Experts are divided on what that means for an overheated economy, with some seeing an imminent recession and others seeing something more like a plateau or smaller slowdown.
Meanwhile small-business owners still have to grapple with a historically tight labor market. Quit rates — the number of employees voluntarily leaving their jobs, rather than being fired or laid off — remain at sky-high levels, with 2.9% quitting in April alone, according to preliminary numbers by the Bureau of Labor Statistics. That falls just short of the all-time high in November, and it means more than 4.4 million Americans walked off the job that month.
Business owners are already ramping up their summer hiring, and teenagers are increasingly making up bigger shares of new hires, according to payroll and benefits platform Gusto Inc. In April 2019, just 2% of all hires on Gusto’s platform were 15 to 19 years old, growing to 7.7% in 2021 and to 9.3% in 2022.
Small-business owners might not see much relief from the tight labor market anytime soon, as the labor shortage is exacerbated by long-term demographic shifts that will play out over the coming years.
The current dynamics of the hiring market have forced small-business owners across the country to increasingly pony up higher salaries for workers.