Small business owners in Massachusetts and across the country are reporting inflation and supply chain disruptions are impacting their businesses in big ways, according to new research from Bank of America.
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Small business owners in Massachusetts and across the country are reporting inflation and supply chain disruptions are impacting their businesses in big ways, according to new research from Bank of America.
Despite these difficulties, business confidence remains strong, with 64% anticipating their revenue will increase over the next 12 months. In addition, business owners are continuing to recover from the pandemic, with more than three-in-five business owners (62%) feeling their business has fully or partially recovered. Nearly half (48%) cited increased consumer spending as critical to their recovery.
Business owners are increasingly concerned about the impact of inflation, supply chain, and labor shortages, and these factors are leading them to make operational changes.
Eighty-eight percent say inflation is impacting their business, causing them to raise prices, reevaluate cash flow and spending for the year ahead, lose sales, reduce business costs, and increase employee wages. And 76% of business owners say supply chain issues are impacting their business, causing them to raise prices, struggle sourcing products and supplies, and delay delivery of goods and services.
Additionally, 41% say labor shortages are impacting them, causing them to work more hours due to staff shortages, struggle to fill job openings, reduce the products they offer, raise wages, and lose customers.
Though the market is difficult, small business owners can take action to mitigate these looming challenges. For example, business owners can increase prices relative to specific supply issues, rather than raising prices across the board, to avoid frustrating customers while still accounting for the impact of inflation and supply delays.
Knowing supply chain disruptions are likely to persist, entrepreneurs should review their networks and consider expanding to include multiple suppliers. Offering tools like loyalty programs, honest shipping estimates, and accessible help lines are key to keeping customers happy.
Business owners should focus on employee retainment. Offering competitive salaries and other incentives like flexible hours can keep employees satisfied.
Business owners believe new technologies will be critical to risk reduction. Over the past 12 months, 70% of business owners have adopted new digital tools and strategies, including accepting more forms of cashless payments and online banking. Longer term, 44% of business owners plan to prioritize digital sales, and many believe cybersecurity and automation will be critical.
Chris Hudach is vice president small business manager, and Chris Delphia is vice president small business banker for the New England region of Bank of America.
