The National Federation of Independent Business (NFIB) Research Center released its latest COVID-19 survey assessing the impact of the COVID-19 pandemic on small businesses. This is the 21st survey in the series and includes an update on COVID-19 variants, supply chain disruptions, staffing shortages, and more. The survey was conducted from December 30, 2021 – January 4, 2022, with 710 responses collected.
“The COVID-19 pandemic, exacerbated by the recent surge in COVID cases, continues to disrupt small business operations and sales,” said Holly Wade, executive director of NFIB’s Research Center. “Staffing shortages and supply chain disruptions also haven’t eased for small businesses despite owners attempts to raise compensation and adjust business operations to accommodate.”
Key findings include:
Recent COVID-19 Surge
- The recent increase in COVID-19 cases has negatively impacted about two-thirds of small business owners to varying degrees.
- Eleven percent of owners reported the surge in COVID-19 cases has a significant impact on their business, 23 percent reported a moderate negative impact, and 34 percent a mild negative impact.
- Of those negatively impacted, 19 percent reported that the rise in cases is significantly impacting employee work attendance. Twenty-three percent say that it’s moderately impacting work attendance, and 34 percent report a mild impact.
- Related to sales, 10 percent of owners negatively impacted reported that the recent surge is significantly impacting sales, 26 percent report it is moderately impacting sales, and 34 percent report the increase is mildly impacting sales.
Supply Chain Disruptions
- Nearly half (47 percent) of small business owners reported supply chains had a significant impact on their business, 27 percent reported it having a moderate impact, and 18 percent said it had a mild impact. Eight percent reported supply chain disruptions not an issue.
- Forty-four percent of small business owners who are experiencing disruptions say that the disruption is worse not than it was three months ago, a decline from 62 percent in October.
- The vast majority (87 percent) of small business owners anticipate the supply chain disruption that is impacting their business to continue for five months or more.
Staffing Shortages
- Twenty-three percent of small employers are currently experiencing a significant staffing shortage and 20 percent are experiencing a moderate staffing shortage.
- Of those employers currently experiencing a staffing shortage, 14 percent are experiencing significant loss of sales opportunities and 23 percent report moderate loss of sales opportunities.
- The severity of lost sales opportunities has lessened since late October likely due to more owners successfully adjusting operations to accommodate demand.
- The staffing shortage is not easing for most small employers as 45 percent reported that their current staffing shortage is about the same as it was three months ago. One-quarter of small employers reported it being worse and 5 percent reported their current staffing shortage is better than it was three months ago.
Business Adjustments
- Small employers facing staffing shortages are making adjustments to attract applicants for open positions: 83 percent increased wages, 24 percent increased paid time off, 20 percent offered or enhanced hiring bonuses, 24 percent offered or enhanced referral bonuses, and 29 percent offered or enhanced health insurance benefits.
- Small employers are also making business operations adjustments to compensate the staffing shortage: 43 percent are offering more hours to part-time employees, 61 percent are offering overtime to full-time employees, 88 percent reported that the owner(s) are working more hours, 38 percent have resorted to more drastic measures with adjusting business operation hours, 33 percent introduced new technology to enhance productivity, and 29 percent reduced the variety of goods and services sold.
The Economy
- Most small business owners reported that their local economy remains below pre-crisis levels of economic activity.
- Only 21 percent of owners reported that economic conditions are back to normal now in their area.
- Thirteen percent of owners anticipate an economic recovery in their first half of 2022 and another 27 percent report the second half of 2022 before economic conditions return to pre-crisis levels. Thirty-nine percent of small business owners expect conditions not to fully improve until 2023 or later.
COVID-19 Small Business Programs
- About one-third of small business owners reported that they received a second-draw Paycheck Protection Program (PPP) loan in 2021.
- The vast majority of owners (84 percent) have applied for PPP loan forgiveness applications for their second PPP loan.
- Only 14 percent of small employers reported they are very familiar with the Employee Retention Tax Credit (ERTC) and another 34 percent are somewhat familiar.
- Thirteen percent of small employers claimed the ERTC for wages in 2020 and another 12 percent claimed the ERTC for wages in 2021.
This publication marks NFIB’s 21st Small Business COVID-19 survey assessing the health crisis impact on small business operations, economic conditions, and utilization of the targeted small business loan programs. The first series was published in early March 2020 with subsequent publications every 3-6 weeks, found here. The full survey of the 21st edition is available here.