Small Businesses Owners Still Facing Challenges
Despite an improving economy, small business owners are still facing challenges. The data points that these business owners provide is something that should not be ignored.
There are more than 30 million small businesses in the United States, as reported by the Small Business Administration. It’s worth noting that small businesses make up approximately 99% of all businesses in the country. Moreover, these establishments employ nearly half of all Americans, equating to around 60 million individuals working for smaller companies.
Are Businesses Owners Feeling More Optimistic?
On Tuesday, the NFIB’s Small Business Optimism Index increased 1.6 points in June to 91.0, however, it is the 18th consecutive month below the 49-year average of 98.
When analyzing the top concerns of small business owners, both inflation and labor quality are tied for the first place, with approximately 24% of owners reporting each as their single most important problem.
On a positive note, the net percentage of owners raising average selling prices has decreased by three points, landing at a seasonally adjusted net of 29%. While this level remains significantly inflationary, it is showing a positive downward trend.
It’s essential to mention that this is the lowest reading since March 2021, further emphasizing the importance of monitoring the current trends in the small business landscape for a comprehensive understanding of the market.
Additional findings included that:
- Small business owners expecting better business conditions over the next six months improved 10 points from May to a net negative 40%, 21 percentage points better than last June’s reading of a net negative 61%.
- Forty-two percent of owners reported job openings that were hard to fill, down two points from May but remaining historically very high.
- The net percent of owners who expect real sales to be higher improved seven points from May to a net negative 14%.
Challenges Facing Small Businesses
According to the latest NFIB monthly jobs report, it appears that small businesses are facing challenges in their hiring efforts. In June, 59% of owners indicated that they were either actively hiring or attempting to do so, which represents a decrease of four points compared to May.
Shockingly, 92% of these business owners reported that they encountered a severe shortage of qualified applicants for vacant positions.
Sources: nfib.com, FMeX
Moreover, small businesses seem to be curbing their spending habits as well.
In the past six months, 53% of owners reported capital outlays, which is a four-point decrease from May. Among those who made expenditures, 37% invested in new equipment, while 21% acquired vehicles.
Additionally, 14% focused on improving or expanding their facilities, and 8% allocated funds for new fixtures and furniture. Lastly, 6% even went as far as acquiring new buildings or land for future expansion.
These numbers clearly indicate the current state of affairs for small businesses, highlighting the uphill battle they face in terms of hiring and financial decisions.
