The National Federation of Independent Business (NFIB) Research Center released the latest COVID-19 survey assessing the impact of the COVID-19 pandemic on small businesses. This is the 22nd survey in the series and includes an update on prices, supply chain disruptions, sales levels, staffing shortages, and more. The survey was conducted from March 10-11, 2022, with 605 responses collected.
“The small business recovery continues to be held back due to soaring inflation, ongoing supply chain disruptions, and staffing shortages,” said Holly Wade, Executive Director of NFIB’s Research Center. “Most small business owners have raised their prices to adjust to the numerous challenges they are facing.”
Key findings include:
Prices
- About three-quarters (73 percent) of small business owners have increased their average selling prices due to supply chain disruptions and/or increased compensation due to staffing shortages.
- Of those who raised prices, 44 percent have raised prices by 10 percent or more, another 30 percent have raised prices by 5 percent – 9.9 percent.
Supply Chain Disruptions
- Over half (51 percent) of small business owners reported supply chain disruptions had a significant impact on their business. Another 30 percent of owners reported it had a moderate impact and 14 percent reported a mild impact.
- Eighty percent of small business owners experiencing supply chain disruptions reported that the disruption is causing lost sales opportunities to some degree.
- Forty-five percent of owners experiencing disruptions reported it is worse now than it was three months ago.
- Half (50 percent) of owners reported about the same level of disruption from last quarter and 4 percent reported it easing up from three months ago.
- The vast majority (89 percent) of small business owners anticipate the supply chain disruption that is impacting their business to continue for five months or more.
Staffing Shortage
- Twenty-four percent of owners are currently experiencing a significant staffing shortage and another 18 percent are currently experiencing a moderate
- Of those owners currently experiencing a staffing shortage, 23 percent are experiencing a significant loss of sales opportunities and 22 percent reported a moderate loss of sales opportunities because of the staffing shortage. The severity of lost sales opportunities has lessened in recent months due to more owners successfully adjusting operations to accommodate demand.
Business Adjustments
- When asked what adjustments, beyond normal hiring practices, small employers have taken steps to attract open positions, 85 percent reported increasing wages, 28 percent increased paid time off, and 22 percent offered or enhanced hiring bonuses.
- Eighteen percent of small employers offered or enhanced referral bonuses and another 27 percent offered or enhanced insurance benefits.
- When asked what adjustments have been made in business operations to compensate for the staffing shortage, 43 percent of small employers experiencing a staffing shortage are offering more hours to part-time employees.
- Sixty-two percent of owners are offering overtime to full-time employees, almost all (91 percent) employers responded that the owner(s) are working more hours. Over one-third of owners (39 percent) have resorted to more drastic measures with adjusting business operation hours. Thirty-six percent of employers have introduced new technology to enhance productivity and 37 percent have reduced the variety of goods and services sold.
Recent COVID-19 Surge
- January’s surge in COVID-19 cases negatively impacted about two-thirds (68 percent) of small business owners to varying degrees.
- Twelve percent of owners reported that the surge in COVID-19 cases had a significant negative impact on their business, 19 percent reported a moderate negative impact, and 36 percent reported a mild impact.
- Of those owners negatively impacted, 19 percent reported that the rise in COVID-19 cases significantly impacted employee work attendance. Another 26 percent reported it moderately impacted work attendance and 34 percent reported a mild impact.
- Related to sales, 13 percent reported that the recent surge significantly impacted sales, and 24 percent reported it moderately impacted sales.
The Economy
- Almost one-quarter (24 percent) of owners reported that economic conditions are back to normal now in their area.
- Ten percent of owners anticipate an economic recovery in the first half of 2022 and another 19 percent anticipate the second half of 2022 before economic conditions return to pre-crisis levels.
- Nearly half (48 percent) of small business owners are less optimistic and expect conditions not to fully improve until 2023 or later.
COVID-19 Small Business Programs
- Only 13 percent of small employers are very familiar with the Employee Retention Tax Credit (ERTC) and another 41 percent reported somewhat familiar. About half (47 percent) of small employers are not at all familiar with the ERTC.
- A fifth of small employers claimed the ERTC for wages in 2020. Another 18 percent of small employers claimed the ERTC for wages in 2021.
This publication marks NFIB’s 22nd 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 3-8 weeks, found here. The full survey of the 22nd edition is available here.