Despite Challenges, Two-Thirds of Businesses Report Good Health

Inflation remained the top concern among small business owners in the Q2 2022 Metlife and U.S. Chamber of Commerce Small Business Index.

The survey found that 88 percent of small business owners were concerned about the impact of inflation on their business, with 44 percent indicating it was the top challenge facing the small business community – up 11 percentage points from Q1 2022. To keep up with inflation, 69 percent of surveyed businesses said they increased prices on products or services, up from 67 percent last quarter. What’s more, 46 percent reported having taken out a loan to cover higher costs due to inflation, up from 39 percent earlier this year.

“Historic inflation is top-of-mind and deeply troubling to small businesses right now,” said U.S. Chamber of Commerce Vice President of Small Business Policy Tom Sullivan. “But at the same time, there is confidence among small business owners that customer demand will remain strong, and this quarter’s Index shows they want to hire and plan on meeting that demand in the coming months.”

Indeed, it appears businesses are becoming more aggressive as they try to fill open positions. Thirty-four percent of survey respondents reported they were offering employees greater flexibility and 33 percent have increased wages to improve retention and attract talent. Additionally, 40 percent of small business owners said they are offering a hybrid work environment. Despite those changes, many businesses are still finding it difficult to attract workers. Fifty-five percent were concern about filling empty roles while 54 percent were worried about retaining employees. As a result, owners are finding themselves working more to make up for the labor shortage. Half of all respondents said they are working more hours now than they were a year ago.

Although small businesses are facing many challenges, most owners appear optimistic about the future. Two-thirds said their business was in good health – a five percent increase compared to Q1 2022 – and the same number expect revenue to increase over the next year. These positive results helped to push the overall index up to 66.8 for the quarter, an increase from 64.1 in Q1 2022 and a new high mark since the pre-pandemic reading of 71.7 in Q1 2020.

“Despite facing headwinds, it is promising to see small business owners’ optimism reach a new pandemic-era high,” said Cynthia Smith, senior vice president, regional business at MetLife. “America’s small businesses employ tens of millions of people and are a major contributor to the nation’s economy. This resilience among small business owners will play an essential role as they navigate economic uncertainty.”