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State Of Small Business: What Recent Surveys Say At End Of 2021

It feels a bit like Groundhog Day in the world of small businesses: higher prices, hiring difficulties, supply chain headaches. And unrelenting uncertainty over the trajectory of the national economy.

Here’s a look, via recent small business surveys, at how they’re doing as we head toward the end of 2021.

Overall Sentiment: On One Hand, On the Other

First, the good news. In its Q3 report, released in October, Yelp found that “the vast majority [85%] of businesses that experienced a temporary closure during the pandemic have reopened.” In the most recent Small Business Pulse Survey data from the Census Bureau (now in Phase 7, through the first week of December), 36% of respondents expect recovery to take longer than six months. That is the best reading since July and far better than a year ago, when nearly half of small businesses saw prolonged recovery.

This improvement in small business outlook may reflect the banner day that many experienced two days after Thanksgiving, on what’s become known as Small Business Saturday. An American Express survey said consumer spending at small businesses hit an all-time high of $23.3 billion this year. That was an 18% increase from 2020. Over half (58%) of respondent shoppers said they bought something from a small business online. That was just 43% in 2019.

Fortified optimism among small businesses is also reflected in new business openings, the total number of which is higher through the first three quarters of 2021 than during the same time period in 2019, according to Yelp. Increases have been seen especially among hotels, nightlife (dance clubs, comedy clubs, lounges), and beauty services.

Now the not so great news.

The Small Business CEO Confidence Index, tracked in the WSJ/Vistage survey, fell in November for the sixth straight month. Just 26% of respondents expect economic improvement within the next year, while 34% expect the economy to worsen. Similarly, the October Small Business Economic Trends report from the National Federation of Independent Business (NFIB) found a continuing slide in the share of small businesses expecting better business conditions within six months.

Few small businesses have enjoyed full recovery. In Alignable’s Road to Recovery November report, just 27% said they are at or above pre-Covid revenue levels. Respondents in the Pulse survey (with a much larger sample) report even worse experience. Just 19% have returned to their normal level of operations, a drop of three points from July.

Worryingly, one in eight small businesses in the Pulse survey say they “do not believe this business will return to its normal level of operations.” That sounds low, but it’s the highest share saying this in any phase of the survey. Alignable also highlighted what continues to be a disparate pace of recovery among small businesses: 85% of minority-owned businesses say have yet to fully recover, compared to 77% veteran-owned, 76% women-owned, 72% non-minority owned.

Capital? Maybe Later.

In Biz2Credit’s latest Small Business Lending Index, reporting results for November, loan approvals for small businesses rose across nearly all types of lenders from the previous month:

  • Alternative lenders: 25.8%
  • Institutional lenders: 24.8%
  • Credit unions: 20.6%
  • Small banks: 19.9%
  • Big banks: 14.2%

Each, with the exception of credit unions, was higher than a year earlier.

The challenge, it seems, is that not many small businesses are seeking fresh finance. In the NFIB report, nearly one-quarter (23%) of respondents said all their credit needs were met—and 63% reported no interest in a new loan. Those findings are in line with the Pulse survey, where just 14% of small businesses said they needed to obtain financial assistance or more capital. That share has been below one-fifth since mid-March.

Small businesses, according to these surveys, just don’t see the need for more capital or credit right now. That could be due to the dour expectations discussed above; or, it could be due two other headwinds facing small businesses.

Inflating Delays

The federal government reported last week that consumer prices rose last month at their fastest pace since 1982. This was no surprise to small businesses, who have been saying for weeks that they’re paying higher prices. Three-quarters of respondents in the Pulse survey say they face “moderate” or “large” increase in prices compared to pre-COVID. This is particularly true in construction, manufacturing, and accommodation/food service.

While many small businesses may have attempted to eat those higher prices in the hope that inflation would be “transitory,” more have begun to pass costs along to customers. The NFIB survey reported a seven-point increase—to a net 53 percent—in small businesses raising prices.

Nine out of 10 small businesses in the Alignable survey said they’re concerned about the negative impact of inflation, with one-third (34%) saying costs of supplies and inventory have risen by more than 25%!

Supply chain difficulties and delays continue to contribute to rising prices. Over half (55%) of respondents in the WSJ/Vistage survey cited challenges with domestic suppliers. The share isn’t quite that high in the Pulse survey (44%), but that’s close to the highest share going back to August 2020. Another 19% say they’re facing foreign supplier delays.

Back in January of this year, 12% of small business Pulse respondents said their biggest future need was to identify new supply chain options. That had nearly doubled, by the beginning of this month, to 22%.

Higher and Hire

Compounding their headaches—and contributing to higher prices—are the difficulties faced by small businesses in recruiting new employees. Here’s a rundown of survey findings on this front.


  • Two-thirds face hiring difficulties, with 43% saying it’s “significantly more difficult” to find new employees.

NFIB Small Business Economic Trends:

  • Net 44% reported raising compensation in a bid to hire new employees. That’s the highest level in the 48-year history of index.

NFIB Jobs Report, a separate survey run in November:

  • Labor quality was cited as the top problem by 29% of small businesses, the highest in the 48 years of the survey.
  • 48% said they had job openings they couldn’t fill; the historical average is 22%.
  • 56% said there were no or few qualified applicants for their openings.

Census Pulse:

  • 32% said they had difficulties in the last week hiring paid employees. (That was actually the lowest level for this particular question.) But for the twelfth straight survey reading, identifying and hiring new employees was cited as the biggest future need.

Supporting Small Business Competitiveness

One more recent survey is worth calling attention to, as it relates to ways that small businesses are trying to attract and retain employees. A new working paper published last month by the National Bureau of Economic Research found, in a survey, that small business support for paid family leave (PFL) “increased significantly during COVID-19.” In particular, those small businesses that used a state PFL program (in this case, New York or New Jersey), demonstrated the greatest increase in support for PFL policies.

The authors take care to note limitations and areas for further research, but this is noteworthy for a couple of reasons. First, expansion of paid leave is at the core of Washington policy disputes today, right on the heels of the pandemic and the demands it placed on workers who were sick or caring for sick family members. Second, the paper’s findings are contrary to the conventional wisdom that small businesses universally oppose paid leave policies.

Either way, this finding (however limited) demonstrates that small businesses might be thinking more creatively and expansively about how to navigate today’s challenges. Policymakers should be creative in seeking to support them.

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