Supply chain issues topped the list of concerns for small business owners in the first six months of 2022, but they see those pressures easing in the latter half, according to research. In the meantime, inflation is expected to continue impacting business owners, with a majority planning to further raise their own prices.
The latest PNC semi-annual Economic Outlook survey of small and mid-size business owners and executives is a good gauge of the overall economy.
“The events in Ukraine were not on the minds of business owners when the survey was conducted in January,” says PNC chief economist, Gus Faucher, “There was concern at that time about rising prices, and that worry has likely intensified, given the rapid increase in energy prices, among other factors.”
In January, 34 percent of owners who rely on a supply chain said timeliness had worsened in the previous six months and 28 percent of businesses that rely on inventory were faced with the challenge of not having enough supply to meet expected demand. However, 57 percent expected these issues to improve in the next six months.
“Supply chain problems have been a big contributor to the highest inflation the U.S. has seen in almost 40 years. But it’s encouraging that most small businesses see this easing soon,” Faucher said.
Rising prices also are on the minds of business owners‚ 51 percent expect to increase their prices in the next six months and 34 percent percent say their prices have already gone up in the past six months.
Turnover and Hiring Impacts: Forty-three percent of business owners report losing staff since the start of the pandemic, which they agree is bad for business. Top reasons for employee departures are illness or death (50 percent), worker concerns for health or safety (46 percent), and changes in lifestyle or priorities (36 percent).
Among businesses with employees, 26 percent say it’s become harder to hire qualified personnel. Businesses are responding to recruiting challenges, most notably through improved work conditions, like health and safety improvements, allowing more flexible work arrangements, and increasing compensation. In the meantime, businesses are coping with worker shortages by increasing existing employees’ workloads, having owners or managers cover shifts and by increasingly relying on technology or automation.
Other key survey findings include:
• Vaccine boosterism: Fifty-six percent of business owners say a majority of their workforce has a COVID-19 booster vaccination. Sixty-five percent have taken some action to encourage boosters through a requirement (31 percent), assistance and/or education (29 percent), incentives (22 percent) or restrictions for those who choose not to receive the booster (19 percent).
• Tempered optimism: Business leaders’ expectations about their own companies remain strong with 47 percent feeling highly optimistic and only two percent feeling pessimistic. However, their outlook for the national and local economies has shifted to cautious.
• Business adaptation: Small and mid-sized businesses have made dramatic, lasting changes to adapt to the pandemic environment. Ninety-two percent have made at least one change to policies, processes, operations or use of technology, and almost all of those owners expect one or more of the changes to become permanent. For full survey results, visit pnc.mediaroom.com.