March 03, 2022
- 85% of small business owners say they are concerned about the impact of inflation on their business, up from 74% last quarter.
- One in three (33%) small business owners now rank inflation as their highest concern.
- In response to inflation pressure, 67% of small business owners have raised prices.
Small Businesses Say Inflation Is Their Top Concern
Inflation is, by far, the top concern for small businesses this quarter, according to new data from the MetLife & U.S. Chamber of Commerce Small Business Index survey taken January 14 - 26, 2022. Small businesses also expressed high levels of concern over supply chain disruptions. While these were key challenges cited in Q4 last year, concerns around inflation and supply chains have intensified.
Both issues are forcing small businesses to find ways to improvise and deal with an environment where increasing prices and supply chain headaches are the norm, at least for the foreseeable future. Some small businesses are reacting by raising prices or altering their supply chains.
Some small businesses cited concern about rising interest rates this year—and what impact that might have on their business. This comes ahead of anticipated rate increases from the Federal Reserve later in March. Although rising rates are not as top-of-mind as the reported difficulties small business owners are facing due to soaring prices or supply chain disruption, it’s a concern to watch.
The quarterly MetLife and U.S. Chamber Small Business Index has more insights from small business members on the current state of the economy. Look for next quarterly release in late March 2022.
Heightened Concern for Inflation Spans Regions and Sectors
With inflation reaching multi-decade highs, small businesses say rising costs have become their top challenge. Furthermore, small business concerns over inflation are growing—they are much higher than they were last quarter (Q4 2021).
One in three (33%) small businesses now rank inflation as the biggest challenge facing the small business community (up 10 percentage points from Q4 2021) and up 14 percentage points from Q3 of last year.
More than eight in ten (85%) small business owners or decision makers are concerned about the impact of inflation on their business and almost half (44%) indicate they are very concerned (up 13 percentage points since Q4 2021). Three in four small businesses find managing higher costs due to inflation difficult (76%) and say rising prices have had a significant impact on their business in the past year (74%).
In Q2 2021, only 16% of small businesses surveyed said that inflation was a big concern, behind their concerns about taxes and consumer demand (both at 23% saying they were big concerns) at the time.
Small Businesses Raising Prices To Cope With Spiralling Inflation
To cope with rising inflation small business owners are adjusting, most often by raising the prices for their goods and services. A strong majority (67%) of small businesses report having to raise their prices over the past year. Another four in ten (41%) report having decreased staff or taken out a loan in the past year (39%) in response to growing inflation pressures.
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There are nuances to how small business owners are responding depending on firm size and sector. Larger small businesses (those with 20 or more employees) are more likely to report decreasing staff or taking out a loan in response to inflation than those with fewer employees. Small businesses in the retail sector are the most likely sector to report increasing the prices of their goods and services (80%) compared to those in professional services (68%), manufacturing (65%), and services (56%).
Inflation Everywhere: Across The Country And For All Sectors
Inflation is everywhere: the impacts of rising inflation are affecting small businesses of every size, in every sector, and in every region of the country.
In fact, small businesses owners in every region of the country cite it as one of the largest challenges they face. Small businesses with 1-4 employees and 5-19 employees also rank inflation as the top challenge—while small businesses with 20-499 employees rate it as a top-tier concern alongside COVID-19 protocols and supply chain issues. It is also among the biggest concerns in all four regions of the country. Finally, across sectors, those in the manufacturing (41%), services (35%), retail (32%) and professional services (29%) sector all cite inflation as one of the top challenges facing the small business community.
- 37%Thirty-seven percent of small businesses in the South ranked inflation as a top challenge.
- 41%Forty-one percent of small businesses in the manufacturing sector ranked inflation as a top challenge.
Supply Chain Issues Are Small Business’s Second Biggest Worry
After inflation, supply chain issues (26%), along with COVID (24%), are the next biggest concerns for small business owners this quarter. More small business owners (26%) now cite supply chain issues as their biggest problem, up eight percentage points from Q4 2021. (As noted above, 33% said inflation is their biggest concern). The vast majority (76%) of small businesses are concerned about the impact supply chain disruptions are having on their business.
More than six in ten (63%) small businesses report having their supply chain disrupted by COVID, though this has not increased significantly since Q4 2021 (61%). A similar share (65%) state it is difficult to manage disruptions to their supply chain (similar to 61% in Q3 2021).
In response to these disruptions, 61% of respondents report altering their supply chain in the last six months—consistent with the share who said the same in Q4 2021 (63%). Finally, a majority (55%) report having their supply chain disrupted due to a lack of workers.
- 59%Fifty-nine percent of small businesses in the retail sector are unable to keep up with customer demand because of supply chain disruptions.
- 70%Seventy percent of businesses in the manufacturing sector say their supply chains have been dramatically disrupted by the pandemic.
Small businesses from across the country, regardless of size, are concerned about their supply chains. While more than two-thirds of small business decision makers are concerned about supply chain disruptions, this concern is more pronounced for those in the retail (86%) and manufacturing (78%) sectors, compared to services (67%). However, compared with the previous quarter, more respondents from the professional services and manufacturing sectors now report experiencing supply chain disruptions at some point since the pandemic began.
Larger small businesses seem to more acutely feel supply chain disruptions. As the chart shows, small business owners with 20 or more employees are more likely to report that their business’ supply chain has been dramatically disrupted by worker shortages or the pandemic compared to smaller businesses. The share of larger small businesses (with 20-499 employees) who report their supply chain was impacted by worker shortages has increased compared to Q4 2021 (66% vs. 54%).
70% of Small Businesses Concerned About Rising Interest Rates
Interest rates have hovered near zero since March 2020. However, the Federal Reserve is expected to raise them in its March meeting. In light of this, seven in ten (70%) small businesses are concerned about the impact rising interest rates will have on their business.
In fact, nearly three in ten (29%) are very concerned about rising interest rates. However, when prioritizing the top challenges the small business community faces, business owners rank rising interest rates at the bottom of concerns coming out of the pandemic (only 7% said rising rates are a big challenge).
Clearly, while rising Fed rates are not a primary concern of small businesses, it is still on their mind and gives them concern. This is largely true across geography, size, and industry, although respondents in the West region (76%) and those in the professional services industry (78%) are slightly more concerned relative to their counterparts.
These are the findings of an Ipsos poll conducted between January 14–26, 2022. For this survey, a sample of 750 small business owners and operators age 18+ from the continental U.S. Alaska and Hawaii was interviewed online in English. 
This report’s findings are focused on a subset of questions from the MetLife and U.S. Chamber of Commerce Q1 2022 Small Business Index survey. The Index scores for Q1 2022 will be released in a subsequent report.
For the complete survey and Index methodology, download the full report.
 Beginning in Q2 2020, the MetLife/U.S. Chamber of Commerce Small Business Index survey has been conducted via online surveys, in place of the typical phone-based approach. This methodological shift is in response to anticipated lower response rates in dialing business locations as a result of mandated closures related to the COVID-19 outbreak. While significant changes in data points can largely be attributed to the recent economic environment, switching from a phone to online approach may have also generated a mode effect.