Inflation, burnout among biggest challenges small business owners face: Survey

Capital One measured the impact that the unforeseen economic conditions over the last few years have had on small business owners.
Written by Evan Zimmer, Staff Writer

Capital One released Wednesday the results of its small business survey. The survey found that 48% of small business owners are concerned about inflation, and 42% have experienced burnout in the last month.

The survey was conducted from March 25 to March 30, 2022 among 1,200 small business owners and 300 auto dealership owners. Small businesses are defined as businesses with total annual revenues of less than $20 million.

According to Capital One's survey, 71% of small business owners indicated that inflation has had a negative impact on their business, and 77% are worried about lasting impacts. These impacts come in the form of lower sales and greater cost of goods.

Source: Capital One

In response, small business owners are taking preemptive action. A total of 27% indicated they've built up cash reserves, while 23% have preemptively increased their prices, and 21% have purchased more inventory. 

"We continue to reflect on the news that inflation is growing at rates not seen in 40 years," John and Kendall Antonelli, co-founders of Antonelli's Cheese Shop in New York, said in a statement provided to ZDNet. "In addition, the conversation beginning to percolate about a possible recession looming in late 2022 and into 2023 gives us pause as we determine when and how to invest into our growing business. We continue to be eager to serve our customer base and meet the needs of cheese lovers all across the country."

Inflation was measured at 8.5% in March, a four-decade high, meaning many Americans are facing rising prices for necessary goods like food, clothing, and gas. According to the Federal Reserve, the price of personal consumption expenditures (PCE) -- purchases including food, clothing, and housing -- has increased by 6.6% over last year.

In an attempt to get inflation back under control, the Fed voted unanimously to increase its benchmark federal interest rate by 50 basis points. That means loan interest rates, including lines of credit, credit cards, and mortgages, will all see higher interest rates. However, it also means that the interest earned on savings account balances will increase.

In addition to inflation, "The Great Resignation" has left its mark on small businesses. According to the US Bureau of Labor Statistics, 787,000 people left their jobs in March. 

However, the Capital One survey found that 76% of participants indicated that they are confident they'll be able to fill any open positions within the next six months. Only 16% of business owners are increasing their wages to better attract talent, with Millennial business owners 46% more likely to do so than other small business owners.

According to Federal Reserve Chairman Jerome Powell, wages are rising at the fastest pace in many years. Many workers are looking for higher pay to keep up with the rising cost of goods and living expenses.

Mixed with Russia's invasion of Ukraine and the recent COVID lockdown in China further straining supply chains, it's no wonder that 24% of small business owners indicated they're experiencing burnout from running a business during the pandemic. Additionally, 60% of small business owners feel run down and 58% are constantly worried about their business finances.

Source: Capital One

"There have to be a lot of intentional boundaries put into place," Camille Padilla, co-founder of VODIUM, said during Capital One's small business survey results webinar. In order to help avoid burnout, setting boundaries between personal life and work is important. 

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VODIUM has days where they have no meetings. According to Padilla, the company also tries to be mindful of how to get tasks on someone's radar by not swarming them with Slack messages, text messages, and emails. VODIUM does its best to put the mental health of its employees first.

Taking care of employees is important. According to the Capital One panel, among other things, child care offerings would go a long way for some employees to avoid work burnout.

"As with other things in life, it's all about balance," Steven Tripoli, co-founder and co-owner of Fichi said in a statement provided to ZDNet. "I've had two separate 16-hour workdays in the last month, and several 12+ days as well. So when I have the chance to relax, I do my best to take it and not feel too bad about it."

Despite these stressful economic conditions, the survey also found that 90% of small business owners are confident their businesses will be operating in the next six months. However, only 43% said business conditions are good or excellent.

"The majority of business owners feel just as, if not more, motivated to grow their business today than they did before the pandemic. It is encouraging to see this optimism in spite of significant headwinds from inflation, supply chain disruption, and labor challenges. This is a testament to the resilience and ingenuity of this community," Jenn Flynn, head of small business bank at Capital One, said in a statement.

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