Inflation concerns and difficulty hiring are the leading drivers of pessimism
By Danial Clark
Small business owners’ expectations for the future fell to a 48-year low as owners report inflation continues to be their number one business problem, according to a survey by National Federation of Independent Business (NFIB).
The NFIB’s Optimism Index fell 0.1 points in May to a reading of 93.1, marking the fifth straight month below the 48-year average of 98. Owners expecting better business conditions over the next six months declined four points to a net negative 54%, the lowest level recorded in the survey’s 48-year history. Expectations for better business conditions have deteriorated every month since January.
Twenty-eight percent of owners reported inflation was their most important business problem, a decrease of four points from April. The share of owners raising prices increased two points to 72%, matching the number reached in March, and the highest reading on record.
Amid a tight labor market, 51% of owners reported job openings they could not fill in May. Ninety-two percent of those hiring or trying to hire reported few or no qualified applicants for the positions they were trying to fill. Twelve percent of owners cited labor costs as their top business problem, while 23% said that labor quality was their top business problem.
“Small businesses are the first to feel an economic contraction, so their concerns should be listened to closely,” stated Caleb Silver, Editor in Chief of Investopedia.
How do small businesses counter and then thrive when faced with high inflation and few qualified applicants? By Steve Header
To combat inflation, raise your prices. Yes, raise your prices in order to continue to make sufficient margins, in order to survive. You’re saying, “right, the big corporations will just keep pricing lower as they have the means to weather inflation, so we must keep our prices lower, too.” Small businesses have something big businesses don’t – speed and agility. The majority of customers will gladly pay more to have the product or service faster.
Multiple layers in larger companies prevent them from acting and reacting as fast as small businesses with few layers. For example, a couple would like to have their house painted. They may receive a quote from large company, ABC, for $1200 scheduled to be completed out 10 weeks. They also receive a quote from small company, 123, for $1450 scheduled to completed in 2 weeks. Who wins this bid? Yep, the small business.
Addressing the issue of quality applicants becoming fewer and further in between. Large companies can pay more to attract quality workers and afford to send them for additional training if need be.
Small businesses don’t have this luxury, nor do they need it! There are countless specialist, independent contractors, and companies’ specializing in all areas. Utilize these services to pick and choose only what is necessary, pay for a month or an hour.
Small businesses have so much to offer consumers, let’s stop playing the game of the large companies, and start doing what we do best.