Small businesses are “feeling good” about the health of their ventures and optimistic regarding the future, but they’re also worried about the effects of inflation, according to a poll taken Jan. 14–26 by the U.S. Chamber of Commerce and MetLife.
A third of small-business owners ranked inflation as their biggest challenge, the Chamber said in a March 29 news release announcing the poll results. This is up from 23 percent in the fourth quarter of 2021. Eighty-five percent of small business owners said they were “concerned” about inflation’s impacts, while 44 percent said they were “very concerned” about the price hikes.
More than two in three businesses stated they had to raise prices due to increasing inflation.
“Inflation is top-of-mind for small businesses as it continues to limit their purchasing power, forcing small businesses to raise their prices and absorb higher costs within already thin margins,” said Tom Sullivan, vice president of small business policy for the Chamber.
The Biden administration and Congress “need to focus on easing the burden on small businesses by reducing inflationary pressures and addressing the worker shortage crisis to ensure continued recovery on Main Street,” Sullivan stated in the news release.
Despite challenges posed by inflation, the MetLife and U.S. Chamber of Commerce Small Business Index hit a “pandemic-era high score” of 64.1. Roughly three in five small business owners said their operations were in good health. Hiring and investment continued to show an upward trend while owners anticipate revenues will keep rising.
Other than inflation, there were other issues concerning business owners: 26 percent were worried about supply chain disruptions, 24 percent about COVID-19 safety protocols and compliance, 21 percent about revenues, and 14 percent about the wellbeing and morale of employees.
The Producer Price Index (PPI), which measures inflation from the perspective of costs to manufacturers, surged by 10 percent in February 2022 from a year back, matching January’s record high. On a monthly basis, PPI rose by 0.8 percent.
Small business owners may also face issues with taxes as the April 18 deadline nears. The ever-changing rules and regulations as well as delayed returns and refunds from prior tax periods are proving to be a challenge to business owners.
The IRS is yet to deal with a backlog of 23 million items created as a result of the COVID-19 pandemic disrupting operations.
Scott Orn, CEO of the human resources and accounting startup Kruze Consulting, said he has “never seen” such a level of understaffing and backlog in the IRS. He predicts tax bills for small business owners will be higher in 2022. Many companies had benefited from the recovery made by the American economy in 2021.
“This year, there will be some surprise profitability, with companies ending up with bigger tax bills than they thought,” Orn said. “That’s actually a good thing. The thing to worry about for small business owners is making sure they have the cash-flow support to estimated tax payments—it could surprise you.”
The Associated Press contributed to this report.