It has been a rough couple of years for small business owners. First they faced the challenge of mandatory lockdowns, then the requirements for masking and social distancing. If they survived all of that (and many small businesses did not) they reached the past year where shipping backlogs and inflation have become the dominant concerns. For small business owners, that means seeing the prices they pay for supplies go up every month with no clear end in sight while trying to maintain their customer base who are constantly shocked by the price increases they face. A national small business association found the overall outlook of small business owners is a at a historic low point.
The National Federation of Independent Businesses, a Tennessee-based association of small business owners, said its Small Business Optimism Index fell to 89.5 last month, the sixth straight month of readings below the 48-year average of 98.
The outlook is increasingly dark for many small businesses, with the percentage of owners expecting better business conditions over the next six months falling to the lowest level recorded in the 48-year-old survey. Expectations for better business conditions have deteriorated consecutively over the past six months.
A recent survey of small business owners by Goldman Sachs found that more than 90% of them think a recession is coming next.
Fully 93% of small business owners are worried about the U.S. economy experiencing a recession in the next 12 months, a survey by Goldman Sachs. The poll of 1,533 Goldman Sachs 10,000 Small Business Voice participants was conducted by Babson College and David Binder Research from June 20-23, 2022.
In addition, 38% of respondents have seen a decline in customer demand as a result of inflationary price increases on goods and services.
“What we have found is that small businesses are at the tip of the spear of economic cycles,” said Joe Wall, national director of Goldman Sachs 10,000 Small Businesses Voices.
In other words, they spot economic trends before a lot of others do.
“They don’t see an end in sight in terms of things getting better,” Wall said.
Statistics are one thing but Bari Weiss’ Substack site has a new story up today talking to five small business owners in New York about what it’s like for them now. Not surprisingly, being the tip of the spear in the current economy is not a great experience.
“They’re just redirecting their anger, because I’m the only point for them,” says Hamza El Jamal, a garage and gas station owner in upstate New York. “I tell them, ‘I don’t know if you’ve watched the news anytime recently, but this isn’t exactly in my hands.’”…
Lately, El Jamal has developed a go-to line that he uses with angry customers who come in complaining that he keeps raising gas prices: “If I was making the money you thought I was making, I wouldn’t be standing here listening to you right now.”
The article closes with a focus on Andy Wang, the owner of a restaurant in New York City’s Chinatown:
“Things are harder now than they ever have been. Things just don’t feel normal,” Wang says. “I used to be able to buy a case of eggs for $19. Now, the average is $65. Last week, I had to pay $85. And we don’t know where the roof is. The price just keeps going up.”
Wang hands me a menu, showing “Marinated Egg, $0.50.” Paying more than four times for an item but charging the customer the same amount is unsustainable, but what can he do?
“You can’t expect people to pay that much more for an egg!” he says. “And we can’t just keep printing new menus.”
Every small business owner is the point of contact for a lot of people who are unhappy with the current economy. Every time they ring up a sale and it’s more than the customer expected, they become the bearers of bad news. And with inflation at 9%, there’s a lot of bad news to go around.