Good news for small business owners from the 5th Small Business Recovery Report from Kabbage from American Express. This just-released report reveals that small businesses are “adapting to a shifting market as they look beyond pandemic-wrought challenges, adjust for inflation, and modify hiring approaches.”
COVID Concerns Fade
The new data suggests American small businesses are now less impacted by the coronavirus pandemic, with more than 90% of businesses not stopping, slowing, limiting, or shutting down due to the Omicron COVID-19 variant. And 70% of small businesses report not being at all affected by the virus.
As a result of not having to deal with the challenges of the pandemic, small businesses are growing. Survey respondents reported their average monthly revenues rose 77% in the past six months, from $47,900 in July 2021 to $84,935 in February 2022. Even better, average monthly profits grew an average of 39% in the same period.
Even the smallest small businesses—those with fewer than 20 employees grew, reporting a 13% increase in average monthly revenues and a 12% boost in average monthly profits from July 2021 to February 2022, while large businesses reported 145% and 29%, respectively.
Dealing with Inflation
To deal with increased costs from their vendors (54%) and of raw materials (45%), small businesses increased their prices by an average of 21% across all industries. And 65% of the businesses surveyed plan to keep this higher price point for the next six months, while 18% plan to raise prices even more. More than half of the small businesses surveyed (53%) expect their business to be impacted by supply chain issues for the next three months to a year.
A Shift in Hiring
Just as the U.S. Department of Labor’s February jobs report shows, the nation’s employers added 678,000 jobs in February (with the unemployment rate falling to 3.8%), as 59% of medium and large small businesses reported facing a hiring challenge. And 75% of the smallest small businesses say they aren’t hiring.
Overall, this report is cause for optimism, even though challenges remain. As Kathryn Petralia, co-founder of Kabbage, observes, “Economic indicators like inflation will require adjustments, but the new data illustrates how small businesses are making changes and adapting.”