Senior Writer and Editor, Strategic Communications, U.S. Chamber of Commerce
July 10, 2023
Inflation remains the top concern for a majority of small business owners (54%) according to a recent poll by the Chamber. In comparison, other issues like rising interest rates, revenue, and supply chain issues remain second-tier worries.
Here are the top concerns of America’s small businesses according to the latest MetLife and U.S. Chamber Small Business Index.
A majority (54%) of small business owners cite inflation as a top concern. In fact, inflation is the top concern for small businesses regardless of region, number of employees, or sector.
This is also the sixth consecutive quarter that inflation has topped the list of challenges small businesses see, and consistent with findings in Q1 2023 (54%). No other concern comes close.
“I would say inflation is still going up,” says Hrag Kalebjian, owner of Henry’s House of Coffee in San Francisco, CA earlier this year. “Case in point is our cost of coffee, labor, and overhead like gas and electricity…The challenge is keeping up with these costs, and constantly raising my prices. It seems as though I can't keep up.”
Rising Interest Rates
Concerns about rising interest rates have increased substantially.
Nearly a quarter (23%) of small business say rising interest rates are a top concern. This is up considerably from last quarter (16%), and sixteen points higher than last year (7% in Q1 2022).
Rising interest rates are causing some in the small business community to say they are seeking out financing more earnestly. Three in four small businesses (76%) say that rising interest rates are limiting their ability to raise capital or financing for their business. The spike is also stunting growth, as 50% of small businesses report that they have delayed plans to grow their business due to rising interest rates.
“Tightening in both credit and private equity markets is creating challenges for many small business owners.,” says Stephanie Sims, Founder of Finance-Ability in Scottsdale, Arizona. “Rising interest rates make it more challenging for some entrepreneurs to qualify for financing, although I have seen several loan guarantee programs step up to assist some of these borrowers in securing funding.”
The percentage of all small businesses reporting revenue as a top challenge fell from 22% earlier this year (Q1 2023) to 20% this quarter.
Despite downbeat current views, small businesses have record expectations for revenue. A full 71% of small businesses say they expect next year’s revenue to increase, up seven points from the previous quarter.
Supply Chain Disruptions
Consistent with the previous quarter, 23% of small businesses said supply chain issues are a top concern.
Small businesses’ concern over supply chain issues reached a peak in Q2 2022 with 28% reporting it as a top concern. Since then, it has generally trended downward with 26% in Q3 2022, 20% in Q4 2022, and 21% last quarter saying supply chains are a top concern.
The Q2 2023 SBI survey was conducted between May 8-24, 2023. For more findings from this quarter, and to explore and browse years of small business data, visit: https://www.uschamber.com/sbindex/.