NEW YORK, NY – Small business owners across America are ringing the alarm about the direction the country is headed and are struggling to manage inflationary pressures, navigate the labor shortage and confront mental health struggles, according to a new survey released today from Goldman Sachs 10,000 Small Businesses Voices. For Black-owned small businesses, the challenges are even more steep. The data comes during the Small Business Administration’s National Small Business Week, and after it was revealed last week that small businesses are low on cash reserves and concerned about access to capital.
Only 38% of respondents in the new nationwide survey believe the country is moving in the right direction, representing a 29% decline from June. Seventy-four percent of small business owners expressed concern about the impact of rising COVID-19 infection rates on their businesses.
Inflationary pressures continue to rattle business operations. Eighty-six percent said they are concerned about inflation, with 84% stating they have seen an increase in their operating costs. In a sign that inflation may still be building, 81% of respondents said inflationary pressures have increased since June and 74% said their business’ financial health has been negatively impacted by inflation.
“Just weeks ago, small business owners hoped that a return to normalcy would help jumpstart our recovery, boost sales, increase labor market participation and relieve the stress and mental health pressures we faced during the pandemic,” said Jessica Johnson-Cope, Chair of Goldman Sachs 10,000 Small Businesses Voices National Leadership Council and owner of Johnson Security Bureau in The Bronx, NY. “This data clearly shows we’re on the wrong track with the current surge in COVID-19 cases making it harder for small businesses already struggling to whether inflationary pressures, hire and fill fundamental roles and access childcare and mental health resources that will put them on the road to recovery.”
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Across the country, small businessowners are working to overcome challenges associated with hiring, mental health and childcare as COVID-19 cases continue to rise.
- Seventy-three percentof small business owners are currently hiring full-time or part-time employees, yet 87% of those hiring are finding it difficult to recruit qualified candidates for open positions;
- Eighty percent say difficulty in hiring is impacting their bottom line;
- Forty-nine percent say they or their employees have faced mental health-related issues as a result of COVID-19, and only 19% say they can afford to provide their employees with sufficient mental health resources;
- Forty-four percent say a return for kids to remote learning would make it difficult to retain employees; and
- Sixty-four percent say their workforce challenges have worsened since pre-COVID-19.
An initial dataset released last week alarmingly revealed that 44% of small businesses have less than three months of cash reserves in case of an emergency or another shutdown. Just 31% said they were very confident they could access capital if they needed it.
Black-owned small businesses continue facing more treacherous recovery challenges relative to their peers. Only 20% of Black-owned small businesses are very confident they would be able to access capital if it was needed, a mark that is 11% below their peers. Fifty-one percent of Black-owned businesses have less than three months of cash reserves in case of an emergency or another COVID shutdown – a figure 7% greater than their peers. Fifty-four percent of Black-owned small businesses expect to need to take out a loan or line of credit for their business in the fall or winter, whereas only 29% of non-Black businesses owners shared the same expected need.
Black-owned small businesses have also been slower to recover to pre-pandemic employment levels. Prior to the pandemic, the overall universe’s median number of employees was 11, whereas the median employee number is 10 today among the entire universe. However, among Black-owned small businesses, the pre-pandemic median number of employees was nine, whereas the median employee count at Black-owned businesses today is six.
“Small businesses used their entrepreneurial ingenuity to stay afloat over the past 18 months, but they are nearing a breaking point,” said Joe Wall, National Director of Goldman Sachs 10,000 Small Businesses Voices. “With cash reserves running dangerously low for many small businesses and operating challenges seemingly around every corner, additional relief for small businesses must be a priority for policymakers at the federal, state and local levels.”
Ninety-two percent of small business owners say it is important for the Biden Administration to prioritize policies that level the playing field for small businesses. Two potential relief efforts garnered significant support from respondents. Ninety-six percent of small business owners said state and local governments should prioritize federal COVID-19 relief funds to provide small businesses access to capital. Eighty-three percent support President Joe Biden’s July 9th Executive Order directing the federal government to promote greater procurement competition and increase opportunities for small businesses.
The data is a result of a survey of 1,145 Goldman Sachs 10,000 Small Businesses participants conducted by Babson College and David Binder Research from Aug. 30 – Sept. 1. The survey included small business owners from 48 states, 55% of whom were women. For more information on the survey and its results, please visit gs.com/covid-slowing-the-road-to-recovery.
ABOUT 10,000 SMALL BUSINESSES VOICES
Goldman Sachs 10,000 Small Businesses Voices is an initiative for program participants to organize and advocate for policies that matter to them. It builds on Goldman Sachs 10,000 Small Businesses, which over the past decade has provided access to education, capital, and support services to more than 10,000 small business owners across all 50 states, Puerto Rico, and Washington D.C. Learn more at www.gs.com/10ksb-voices.