According to an NFIB Survey released 9.27.2021: “Fifty percent of small businesses are significantly impacted by supply chain disruptions and another 27% by significant staffing shortages.“

“Supply chain disruptions and staffing shortages have become substantial issues for small businesses across the country. Small employers are making business operation and hiring adjustments in order to compensate for both issues.”

Holly Wade, executive director of NFIB’s Research Center 

Key findings from the survey conducted in early September 2021

• 50% of owners reported that supply chain disruptions have significantly impacted their business, and more than half (55%) of those affected report that the supply chain disruptions are worsening.
• 86% of owners anticipate supply chain disruptions will continue well into 2022.
• 45% of owners are experiencing a moderate-to-severe staffing shortage. Of these owners, over half (52%) are experiencing a moderate-to-significant sales loss as a result of unfilled positions.
• 49% of owners reported that they received fewer job applications now than they did a month ago, compared to 15% who received more than they did a month ago.
• 77% of small employers reported that they increased wages. Smaller numbers offered better benefits such as paid time off (17%), hiring bonuses (16%), referral bonuses (18%), or enhanced health insurance benefits (21%). 
• Almost all (88%) of owners are working longer hours to compensate for the labor shortage, with 64% offering overtime and 41% expanding hours offered to part-timers. 
• A third (33%) of small businesses report that their sales numbers are 75% or less of that before the pandemic. Forty-one percent have returned or nearly returned to normal sales numbers, and a quarter (26%) are exceeding pre-COVID sales. 
• About a fifth of all owners (21%) report that economic conditions have returned to normal in their area. Most owners expect that conditions will not improve until 2022 or beyond. 
• Of the 76% of owners who received PPP loans in 2020, almost all (94%) have applied for loan forgiveness and 41% applied for a second-draw PPP loan in 2021. 
• 8% of owners claimed the Employee Retention Tax Credit (ERTC) on wages in 2021 and 20% applied for Economic Injury Disaster Loans (EIDL). 
• 9% of small business owners say that the recent spike in COVID-19 cases had a large impact on their business, with another 36% saying that it had a moderate impact. 

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Highlights from the annual National Retail Federation survey of college, K-12, back-to-school spending.

• Families with children in elementary through high school plan to spend an average of $848.90 on school items, which is $59 more than last year.
• Total back-to-school spending is expected to reach a record $37.1 billion, up from $33.9 billion last year and an all-time high in the survey’s history.
• College students and their families plan to spend an average of $1,200.32 on college or university items, an increase of $141 over last year.
• Over half ($80) of this increase is due to increased spending on electronics and dorm furnishings.
• Total back-to-college spending is expected to reach a record $71 billion, up from $67.7 billion in 2020.
• The vast majority (76 percent) of K-12 shoppers were still waiting on lists for school supplies as of earlier this month.
• On average, consumers reported that they had completed only 18 percent of their back-to-class purchases so far by early July.

“Consumers are spending more on items like electronics and clothing as they make plans for students to resume activities in person this fall,” Prosper Insights executive vice president of strategy Phil Rist said.

Top destinations for K-12 shoppers

Online (48 percent)
Department stores (48 percent)
Discount stores (44 percent)
Clothing stores (41 percent)
Office supplies stores (27 percent)
Electronics stores (27 percent)

The top destinations for college shoppers

Online (43 percent)
Department stores (33 percent)
Discount stores (30 percent)
Office supplies stores (29 percent)
College bookstores (28 percent)

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“Main Street is doing better as state and local restrictions are eased, but finding qualified labor is a critical issue for small businesses nationwide Small business owners are competing with the pandemic and increased unemployment benefits that are keeping some workers out of the labor force. However, owners remain determined to hire workers and grow their business.”‘

NFIB Chief Economist Bill Dunkelberg

30% | Percentage of employers offering higher wages.

Dunkelberg said businesses have to compete with the amount of money people are receiving in unemployment benefits. “And, of course, they’re competing with each other for the people who are qualified.”

Other key survey findings include:

• Seven of 10 NFIB survey components improved and three declined.
• Sales expectations over the next three months improved eight points to a net 0% of owners, a historically low level.
• Earnings trends over the past three months declined four points to a net negative 15%.
  
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$32 | The drop-off of $32 this year is blamed on the pandemic and related economic crunch.

“There is no question the pandemic has disrupted many aspects of Americans’ daily interactions and activities,” said NRF President and CEO Matthew Shay. “However, there remains a special significance around Valentine’s Day, and consumers are committed to celebrating friends and loved ones, even if that means having to alter those traditional holiday celebrations,” he said.

Survey highlight | This year is the first time consumers listed small businesses as a top-five shopping destination since the question was added to the survey in 2015.

$10.77 | Average spent by parents on items for children’s classmates and teachers, down from $14.45 last year.

$8.47 | Consumers plan to spend an average of $8.47 on colleagues, down from $12.96 in 2020.

74% | Percentage of consumers indicating the pandemic will directly impact their plans for the holiday.

24% | Percentage of consumers who plan to gift their loved one with an evening out, the lowest in the survey’s history.

41% | Percentage of celebrants who are planning a special dinner or celebration in the comfort of their own home.

“Consumers still feel it’s important to spoil their loved ones in light of the pandemic,” Prosper Insights executive vice president of strategy Phil Rist said. “This year’s total and average spending figures are near record highs, as the second-highest in the survey’s history.”

39% | Online is the most popular Valentine’s Day shopping destination
29% | Department stores rank second
17% | Local small businesses and specialty stores tied at 17%

The survey of 7,882 adult consumers was conducted January 4-12 and has a margin of error of plus or minus 1.1 percentage points.

Credit | Jamie Grill via Getty Images

The nation’s small businesses have been hit particularly hard by the pandemic and the corresponding economic repercussions. Only a small number of those who received initial PPP funds expect to be able to maintain current payrolls without additional government assistance, according to Thomas Sullivan, vice president, Small Business Policy, U.S. Chamber of Commerce.

Not surprisingly, the economy is front and center on most small business owners’ minds as they consider casting their ballots this November, according to the latest Small Business Index by MetLife & the U.S. Chamber of Commerce.

Tonight’s Presidential Debate

What do small business owners want to hear from President Trump and former Vice President Joe Biden as they enter the home stretch of the 2020 presidential election campaign? 

The U.S. Chamber’s Sullivan spoke with owners in several battleground states to share what they will be listening for during the debates, which issues they hope the candidates will discuss in more detail, and why it all matters to their companies and their employees.

Here are excerpts of what the small business owners said about what they expected to hear tonight. Links at the bottom of each excerpt leads to a more complete response on USChamber.com

Traci Tapani

Owner and Co-President
Wyoming Machine, Inc.
Stacy, Minnesota

“The COVID-19 pandemic has identified many issues that need to be addressed.  Structural problems in health care, digital infrastructure (especially in rural areas), racial inequity, supply chain weaknesses, etc.  I want to know what actions the candidates would take and how they would prioritize the work that needs to be done to make our country and our economy stronger and more resilient.”

More: (USChamber.com)

Dick Cardew  

Founder
Cardew Hay Co.
Phoenix, Arizona 

“If I had to pick one issue that matters most to my business and livelihood, it would be the candidates’ ability to get a second round of COVID-related help done ASAP.   While our equity markets and, recently, commodity markets are chugging along, America’s small businesses are hurting.  I’m very concerned about a number of our clients who have seen dramatic declines in revenue since March of this year. ”

(More: USChamber.com)

Zawadi Bryant   

CEO
Nightlight Pediatric Urgent Care
Houston, Texas

“I would like the candidates to discuss their plan to reform healthcare. Our healthcare system is broken, expensive, and inefficient…As a business owner, healthcare is one of my biggest expenses.  Each year the premiums go up and the coverage/benefit goes down. This is not sustainable.” 

More: (USChamber.com)

Adam Fazackerley 

Founder & COO
Lay-N-Go
Alexandria, Virginia

“Many small businesses in the U.S. are on life support due to the impact of COVID-19 on their business.  Our customer mix went from being made up of 35% privately owned small retailers and spas to 10% almost overnight.  Doors were shut and the lights turned off.  While Lay-n-Go was able to find other digital channels to sell into, these closed businesses were not. We need to elect a President and Congressional leaders with clearly defined plans designed to bolster the Main Street economy through pro-business legislation and responsible financial support. 

More: (USChamber.com) 

The National Federation of Independent Business (NFIB)’s long-running “Small Business Optimism Index” fell 1.8 points to 98.8 in July. Small business owners continued to temper their expectations of future economic conditions as the COVID-19 pandemic is expected to continue.

“This summer has been challenging for many small business owners who are working hard to keep their doors open and remain in business,” said NFIB’s Chief Economist Bill Dunkelberg. “Small business represents nearly half of the GDP and this month we saw a dip in optimism. There is still plenty of work to be done to get businesses back to pre-crisis numbers.”

Key findings in July’s small business owner index

18% | Job creation plans increased two points to a net 18%.
5% | Five percent acquired new buildings or land for expansion
10% | Spent money for new fixtures and furniture.
26% | Planning capital outlays in the next few months.

“Even with states reopening, sales are often lower due to business restrictions, social distancing requirements, and a still-reduced willingness of consumers to go out and mingle with the general population.”

A net 15% of the owners surveyed reported raising compensation (seasonally adjusted), remaining well below the 36% reading in February before COVID-19 policies were implemented in March. A net 13% plan to do so in the coming months. Eight percent cited labor costs as their top problem, unchanged from June’s reading.

Twenty-one percent of owners selected “finding qualified labor” as their top business problem, with 37% in construction. The COVID-19 disruption for millions of workers did not change the skills of the existing workforce.

The frequency of reports of positive profit trends rose 3 points to a net negative 32% reporting quarter on quarter profit improvement. The major cause of profit weakness is weak sales.

3% | Percentage of owners who reported that all their borrowing needs WERE NOT satisfied
35% | Percentage of owners who reported that all their credit needs WERE MET
51% | Were NOT not interested in a loan
2% | Reported their last loan was harder to get than in previous attempts. 

See: NFIB Small Business Economic Trends Surve

Photo Credit: GettyImages

What the Bipartisan Backers of the Changes are Seeking

1. Giving businesses more flexibility on how the money is spent.
2. An extension in the time between when the money was lent and when it is spent.

Both changes follow complaints from restaurants, hair salons and others who say they can’t hire back staff while they are closed during the coronavirus pandemic and need more money to cover their overhead costs.

Why are the changes needed?

“When we conceived the program, we thought businesses would be able to get up and running after eight weeks, but we know now that’s not the case,” Sen. Ben Cardin of Maryland, the top Democrat on the small business panel, said in a statement.

Senator Marco Rubio of Florida, the Republican chairman of the Senate’s small business committee, said lawmakers need to move fast to extend the length of time the business owners have to make the changes.

The Paycheck Protection Program, established by Congress and the President in late March, was aimed at helping businesses keep making payroll for eight weeks, despite orders to shutdown because of the coronavirus pandemic.

The Wall Street Journal reported earlier on Sunday that revisions were expected to be made to the program by both lawmakers and administration officials.

The steps being considered will mean a shift in the program’s focus—from one that was primarily aimed at keeping employees on the payroll, to also helping to keep small businesses from failing.

“Liberalizing the rules by lowering the requirement to spend 75% on payroll-related costs and/or extending the time frame that funds can be used is critical for the survival prospects of millions of small businesses, and the ultimate success of this program,” said Ann Marie Mehlum, a former top SBA official.

Photo | GettyImages

Perception
60% | Percentage of small business owners who believe their revenue growth underperforms the growth of their peers.

Reality
74% | Percentage of small business owners whose growth actually exceeds the revenue growth of their peers.

Together, the findings suggest that small business owners may have unwarranted self-doubt about the financial health of their businesses. The comparison also reveals that small businesses may have difficulty accurately comparing their businesses to others.

There is a perception that entrepreneurs are often overconfident, says University of California-Berkeley professor Don Moore. “(But) this study shows the potential for small business owners to err on the side of under-estimating their performance when comparing themselves to others.”

11% | Percentage of survey respondents able to correctly estimate the ranking of their revenue performance.

“People who demonstrate underconfidence are more likely to opt-out of or choose to exit a competition when, in fact, they would have succeeded had they persisted,” says Moore. “Providing them access to benchmarking systems and analysis on par with what’s available to large and public companies may reduce anxiety and help them calibrate strategic business decisions.”

​Why do small business owners underestimate themselves?

“The likely reason for this is that people tend to rate themselves below average on difficult tasks,” says Moore. “Simply put, people assume they’re worse than others when a task is hard. Running a small business (is a) difficult task, and respondents showed underconfidence.”

The National Federation of Independent Business (NFIB)’s small business optimism survey ended the year of 2019 historically strong. However, the 46-year-old tracking survey was down slightly for the month of November.

“December marked the end of another banner year for the small business economy, as owners took full advantage of strong consumer spending, and federal tax and regulatory relief,” said NFIB Chief Economist William Dunkelberg.

An increased number of small business owners reported better business conditions and expect higher sales in the next three months, according to Dunkelberg.

Highlights

Small businesses continued to hire and create new jobs with actual job creation matching November’s reading, the highest since May.

9% | Percentage of small business owners who reported higher nominal sales in the past three months. (Three points above the average reading for 2019).

16% | Percent of owners expecting higher real sales (up 3 points). Actual sales volumes are strong and owners are a bit more certain of future sales growth, says Dunkelberg.

19% | Percentage of owners who plan to create new jobs, (down 2 points)

23% | The top concern of owners is finding qualified workers remains the top issue for small-business owners. “Their biggest problem is finding qualified labor, surpassing taxes or regulations,” said Dunkelberg.

Impeachment Impact?

The current focus in Washington, D.C. around impeachment is having little, if any, impact on small business owners, said Dunkelberg. “This is no different than during the Clinton impeachment proceedings.”

“The Index showed little variation over the 1998-99 period that included the pre-impeachment news coverage, the impeachment proceedings, and the aftermath. The initial 2019 path is starting in a similar fashion, albeit at a stronger position,” Dunkelberg said.

About NFIB’s Small Business Economic Trends Survey: The NFIB Research Center has collected Small Business Economic Trends data with quarterly surveys since the 4th quarter of 1973 and monthly surveys since 1986. Survey respondents are drawn from a random sample of NFIB’s membership. The report is released on the second Tuesday of each month. This survey was conducted in December 2019.

Reuters is reporting that U.S. manufacturing tumbled to a more-than ten-year low in September. Why? According to Reuters, the month’s trade tensions weighed on exports, increasing market fears of a sharp slowdown in economic growth in the third quarter.

Quote from the Institute for Supply Management (ISM) Tuesday (October 1, 2019) / “The economy’s fading fortunes have been attributed to the Trump administration’s 15-month trade war with China, which has sapped business confidence and undermined manufacturing.”

Manufacturing has borne the brunt of the trade tariffs, which the White House says are necessary to protect industries from what it says is unfair foreign competition. President Donald Trump blames the Federal Reserve, in particular, Chair Jerome Powell, for the manufacturing sector’s malaise.

“As I predicted, Jay Powell and the Federal Reserve have allowed the dollar to get so strong, especially relative to ‘all; other currencies, that our manufacturers are being negatively affected,” Trump tweeted shortly after the ISM survey was published. “Fed Rate too high. They are their own worst enemies, they don’t have a clue. Pathetic!,” the President said.

1.3 points | The ISM index of national factory activity dropped to a reading of 47.8 last month, the lowest level since June 2009, when the Great Recession was ending.

50 | A reading below 50 indicates a contraction in the manufacturing sector, which accounts for about 11% of the U.S. economy.

“This is serious,” said Torsten Sløk, chief economist at Deutsche Bank Securities in New York. “There is no end in sight to this slowdown, the recession risk is real.”

The manufacturing slump could force the Fed to cut interest rates again in October. The Fed cut interest rates last month after lowering borrowing costs in July for the first time since 2008 to keep the expansion, now in its 11th year, on track.

The downturn in manufacturing in the United States mirrors similar patterns in the euro-zone, Japan, the United Kingdom, and China.

The World Trade Organization cut its forecast for growth in global trade this year by more than half on Tuesday and warned further rounds of tariffs and retaliation, slowing economies and a disorderly Brexit could squeeze it even more.

The ISM said comments from manufacturers “reflect a continuing decrease in business confidence,” and also noted that “global trade remains the most significant issue.”

Export orders plunge

A measure of export orders plunged 2.3 points to 41.0 in September, the weakest since March 2009.

The survey’s factory employment index dropped to 46.3 last month, the lowest in more than 3-1/2 years, from 47.4 in August.

Factory payrolls contracted in September after increasing by a paltry 3,000 jobs in August.

The ISM said only three industries – miscellaneous manufacturing, food, beverage and tobacco products, and chemical products reported growth last month.

“…the trade tariffs designed to bring factories back from overseas, are actually shutting down production at existing plants here in the U.S.” said Chris Rupkey, chief economist at MUFG in New York.

Photos | GettyImages