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New NFIB COVID Survey: Small Business Make Strides on Economic Recovery but Inflation and Staffing Shortages Hold Them Back
New NFIB COVID Survey: Small Business Make Strides on Economic Recovery but Inflation and Staffing Shortages Hold Them Back
January 3, 2023
New NFIB COVID Survey: Small Business Make Strides on Economic Recovery but Inflation and Staffing Shortages Hold Them Back
- Just over one-third (36%) of small businesses are at or exceeding pre-crisis sales levels, only one percentage point higher than in March 2022.
- Thirty-four percent of small businesses are back or nearly back to where they were with sales 75% – 99% of pre-crisis levels with another 20% at sales levels of 50% – 74% pre-crisis.
- Sales levels are less than 50% of pre-crisis levels for 11% of small businesses.
- Most small business owners reported that their local economy remains below pre-crisis levels of economic activity.
- Almost one-third (31%) of owners reported that economic conditions are back to normal now in their area, up from 24% in March.
- Fourteen percent of owners anticipate an economic recovery by the end of the first half of 2023. Over half (55%) of small business owners are less optimistic and expect conditions not to fully improve until the second half of 2023 or later.
- When asked if supply chain disruptions are impacting their business, 36% of owners reported a significant impact, 15 percentage points below March 2022.
- Another 38% of owners reported a moderate impact on their business and 20% reported a mild impact on their business. Six percent of owners reported supply chain disruptions are not an issue.
- Seventy-eight percent of owners experiencing supply chain disruptions reported that the disruption caused lost sales opportunities to some degree. Only 18% of owners report no lost sales opportunities.
- Almost half (49%) of owners reported that supply chain disruptions are causing significant or moderate lost sales opportunities.
- Twenty-two percent of small business owners experiencing supply chain disruptions reported that the disruption is worse now than it was six months ago.
- A little over half (53%) reported about the same level of disruption and 23% reported better than six months ago.
- The vast majority of owners (86%) anticipate the supply chain disruption that is impacting their business to continue for five months or more.
- Twenty percent of small employers are currently experiencing a significant staffing shortage and another 25% are currently experiencing a moderate shortage.
- Of those small employers currently experiencing a staffing shortage, 20% are experiencing a significant loss of sales opportunities and almost one-third (32%) reported a moderate loss of sales opportunities because of the shortage.
- Two-thirds of small employers reported that their current staffing shortage is about the same as it was three months ago. About one-quarter (24%) of small employers reported it being worse and only 8% reported their current staffing shortage is better than it was three months ago.
- When asked what adjustments, beyond normal hiring practices, small employers have taken to attract applicants for open positions, 72% reported increasing wages, 13 percentage points below March. Twenty-nine percent increased paid time off and another 16% offered or enhanced hiring bonuses. Twenty-one percent of small employers offered or enhanced referral bonuses and another 21% offered or enhanced health insurance benefits.
- When asked what adjustments have been made in business operations to compensate for the staffing shortage, one-third of small employers experiencing a staffing shortage are offering more hours to part-time employees. Half of small employers are offering overtime to full-time employees. Seventy-eight percent of small employers responded that the owner(s) are working more hours. Thirty-four percent of owners have resorted to more drastic measures with adjusting business operation hours. Thirty-two percent of small employers have introduced new technology to enhance productivity and 29% have reduced the variety of goods and services sold.
- Almost half (49%) of small employers experienced employee absenteeism related to COVID-19.
- Nearly all (93%) of small business owners reported that they did not experience staffing issues related to employees with long COVID symptoms.
- Almost half (46%) of small business owners have increased their average selling prices specifically because of supplies and inventory inflation.
- Seven percent of owners reported they increased their average selling prices specifically due to higher compensation related to staffing shortages.
- Of those who raised prices, 42% have raised prices by 10% or more, another 27% have raised prices 5% – 9.9%. Eighteen percent have raised prices 1% – 4.9% and another 10% by less than 1%.
- Asked how higher interest rates are impacting their business, one-third reported that consumer spending has slowed due to rate increases. Another 21% reported that business financing payments are more expensive and 6% said credit and loans are harder to get. Forty-one percent reported that higher interest rates have had no significant impact on their business.
- Almost one-quarter (23%) of small employers are very familiar with the ERTC, a 10-percentage point increase from March. Another 43% of small employers are moderately or somewhat familiar. Slightly over one-third (34%) of small employers are not at all familiar with the ERTC.
- Twenty-three percent of small employers claimed the ERTC for wages in 2020. Another 17% of small employers claimed the ERTC for wages in 2021.
- Just over half (57%) of small employers have received the credit.
- Twelve percent received the credit by withholding payroll taxes and 45% received it after retroactively submitting 941X form.
- Thirty-five percent of small employers who filed retroactively reported that it took up to six months to receive the credit. Another 9% reported 7 – 10 months and 6% reported 11 or more months. Of those who filed retroactively, 30% of them are still waiting to receive the credit from the IRS.
- Twenty-three percent of small employers offer paid family leave. For those who offer paid family leave, 69% offer 1 – 2 weeks, and 20% offer 3 – 4 weeks. Another 5% offer 5-8 weeks and 3% offer more than 8 weeks.
- Just over half (51%) of small business owners offer paid sick leave. Sixty-six percent offer 1 – 5 days and another 29% offer 6 – 15 days. Six percent of owners offer more than 15 days.
- For those small business owners who do not offer paid sick leave or paid family leave benefits, 36% reported it was because they can’t afford to offer these benefits.
- Twenty-two percent reported it was because they were not profitable enough to offer them at the moment. Another 12% of owners who do not offer paid sick leave or paid family leave benefits reported it was because they do not view these benefits as necessary to attract employees and 3% because the administration of benefits is too time-consuming and/or confusing.
- Twenty-two percent of small business owners have heard of the “Employer Credit for Paid Family and Medical Leave.” Of those who have heard of it, the overwhelming majority (89%) have not taken the credit on any employee wages paid for family or medical leave.
- Over three-quarters (77%) of owners do not sell their products or services online. Thirteen percent sell products online, 6% sell services, and 4% sell both products and services.
- Of those who do sell their products and services online, 28% of them report that their online sales are 1 – 25% higher than pre-COVID levels, and 14% report that they are 26 – 50% higher than pre-COVID levels. Seventeen percent report that they are 51 – 75% higher and 40% report more than 75%.
- Seventy-nine percent of small employers accept cash as a form of payment. Twenty-one percent use only electronic payments, online or at the company.
- While most small businesses accept cash as a form of payment, about three-quarters (76%) of them report that cash accounts for 25% or less of their total sales. Another 15% report that cash accounts for 26% – 50% of total sales and 9% report more than half.
- When asked how they process their company’s payroll, 47% of small employers reported processing it in-house. Thirty-eight percent use a full-service payroll provider and 15% an outside accountant/bookkeeper.
- Seventy-seven percent of owners have a business website. Almost half (47%) of owners had an outside company or individual initially design their business’s website. Thirty-one percent reported that an owner or employee within the business initially designed their website and another 22% reported that it was a collaborative effort. Forty-seven percent of owners reported that an owner or employee within the business primarily maintains and updates their business’s website and another 47% reported an outside company or individual. Twenty-three percent of owners reported that their website takes online payments.
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