By Nathalie Voit

Small business owners continue to be preoccupied with the impact of inflation on their business, the U.S. Chamber of Commerce and MetLife said in a report made public on June 29.

According to the Small Business Index, about 9 in 10 small business owners (88%) are concerned about rising costs, and nearly half (49%) are very concerned. For reference, 44% of respondents in the previous quarter reported being “very concerned” about the higher cost of living, and just 31% of respondents in Q4 2021 said they were “very concerned” about inflation. 

Forty-four percent of small business leaders cite inflation as their biggest challenge in the year’s second quarter, up from 33% in Q1 and just 19% when the question was first posed to the small business community in Q3 2021.

About 7 in 10 small business owners have raised prices to cope with increased costs. Forty-six percent have taken out a loan to cover higher costs, and thirty-five percent have laid off staff.

At the same time, the majority of owners remain optimistic about the future. The index increased by 2.7 points over the second quarter to 66.8, the highest score since the start of the COVID-19 pandemic.

MetLife and the U.S. Chamber of Commerce said the index’s rise is a testament to the current business environment and is bolstered by owners’ expectations of increased revenue in the future.

For example, two-thirds of small business owners report their enterprise is in good shape. Another 2 in 3 anticipate their earnings to increase over the year. Forty-three percent plan to hire more staff, the highest figure reported since 2020.

“Historic inflation is top-of-mind and deeply troubling to small businesses right now,” U.S. Chamber of Commerce Vice President of Small Business Policy Tom Sullivan said in the report.

“But at the same time, there is confidence among small business owners that customer demand will remain strong, and this quarter’s Index shows they want to hire and plan on meeting that demand in the coming months.”

After inflation, supply chain issues (28%), revenue (22%), and COVID-19 safety protocols and rising interest rates (which tied at 15%) were identified by small business leaders as the top challenges facing their businesses.

Tellingly, sixty-eight percent of entrepreneurs remain concerned about the impact of the pandemic on their business.