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Survey finds 65% of SMBs will close if U.S. inflation rate continues apace

Friday, July 01, 2022 — 13:57:35 (EDT)

SEATTLE, WA – Digital.com, a leading independent review website for small business online tools, products, and services, has published findings from a new survey report examining the impact of inflation on U.S. small businesses. Research experts analyzed responses from 1,000 small business owners and co-owners with 500 or fewer employees.

According to the report, 65 percent of small businesses expect to permanently close, if the inflation rate continues to rise. Thirty-two percent of respondents say permanent closure is very likely, while 33 percent say it is likely they will close. Only 29 percent of small business owners say it is unlikely or very unlikely that they will close permanently. Additionally, six percent of respondents are uncertain about the impact of inflation on their small business.

Businesses more likely to close permanently are already facing challenges such as declining revenue, supply chain issues, customer decline, and long-term effects from pandemic related shutdowns. Forty-eight percent of at-risk businesses say shipping and transportation costs have increased, and 34 percent say they increased payroll due to inflation. Likewise, 50 percent of business owners who do not believe they are at-risk pay higher shipping and transportation costs. Thirty-two percent of businesses that are not likely to close also increased payroll to keep up with inflation.

Survey results indicate that businesses from the advertising, finance, and construction industries are at a greater risk for permanent closure. Eighty percent of advertising and marketing firms, 76 percent of business and finance companies, and 72 percent of construction and manufacturing businesses say they are likely to close because of the rising U.S. inflation rate. Other industries that show potential losses include, education, food and hospitality, personal care, and retail.

"Small businesses have struggled to survive two years of COVID lockdowns," small business expert and marketing consultant Dennis Consorte says. "Many of those that made it through are likely to be low on the resources and energy required to now survive the highest levels of inflation in 40 years."

Ninety-seven percent of respondents say they have taken steps to cope with inflation and other pandemic-related issues. Forty percent of small business owners took a pay cut over the last year, and 31 percent reduced employees’ salaries. Similarly, 37 percent of small businesses raised prices for customers, and 30 percent changed products or services to cut costs. Thirty-two percent of respondents say they implemented staff layoffs to avoid closure.

Digital.com commissioned and conducted this study, which was administered via the online survey platform Pollfish. The survey was distributed to 1,000 small business owners and co-owners on June 17, 2022. All data found within this report derives from the survey, and respondents were selected using Pollfish’s screening tools. To access the complete report, please visit digital.com/inflation-may-force-2-in-3-small-businesses-to-close-in-2022/.

ABOUT DIGITAL.COM

Digital.com reviews and compares the best products, services, and software for running or growing a small business website or online shop. The platform collects twitter comments and uses sentiment analysis to score companies and their products. Digital.com was founded in 2015 and formerly known as Review Squirrel. To learn more, visit digital.com/.

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Source: Company press release. end of article

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