Special Report: Restaurants, Salons, & Gyms Top List Of Businesses That Fear Shutdowns Due To Inflation
TREND TRACKER | DATA INSIGHTS: Boston, MA, May 23, 2022 -- Record-breaking, cumulative inflationary pressures are taking quite a toll on many businesses this month.
Alignable's Small Business Inflation Poll, conducted among 5,268 randomly selected small business owners from 5/7/22 to 5/22/22, shows that 51% are concerned skyrocketing inflation could force them to close their businesses within the next six months.
Looking more closely at the 51% who demonstrated the greatest worries:
- 1% have already closed due to inflation
- 1% plan to shut down their operations by the end of June
- 26% are "highly concerned" about closing, and
- 23% are "somewhat concerned."
Beyond these findings, another 11% say they're "slightly concerned," while 17% can't predict what will happen.
Finally, only 21% say they're "not concerned at all" about succumbing to the financial pressures inflicted by escalating costs. These poll-takers note their businesses are performing well.
This also means that fewer than one-quarter of all small business owners believe their businesses are definitely strong enough to survive the threat of ongoing inflation. That's a very sobering statistic.
Prevailing Small Business Owner Sentiments
Beyond the statistics, our poll-takers' own words further illustrate their daily struggles, as well as some victories. Some are thriving or just getting by, while many others say they've never had such a hard time keeping their businesses going.
Let's start with SMBs who are winning the fight against inflation:
"I'm too busy to keep up. I started three businesses this year & things are going well, despite inflation."
"Inflation is good for my business, as I tell people how to work around it."
"As my competitors close, I'm getting more business from their past clients."
"As my costs go up, I need to pass those onto my customers. It's the only way to thrive or even survive in today's small business economy."
Others are just getting by, saying they have no choice but to stay open and weather the storm:
"We're okay, but costs are the highest they've ever been, and rent goes up every year."
"I don't think I would need to close, but I might have to reduce staff or not pay myself."
"I'm having to seek additional jobs to cope with rising costs of essentials: food and fuel. Needing to dedicate less time to my business as a result."
"I've weathered four recessions. I'll keep going. Just means stress and poverty for my family."
Finally, many poll-takers expressed frustration and fear:
"It's just a matter of time before we have no working capital left to operate with. I'm about to lose everything."
"It's just too hard to keep going. Shutting down later this month or next."
"I shut down my business in three locations. I'll never own another business unless it can run it completely online. Our government is doing nothing to help small businesses."
"Fuel costs might be the death of my business."
"Business is way down. Fuel and interest rates need to come down significantly."
"Buyers just can't afford to buy with homes going $50,000 or more over asking price."
"Yes, we're concerned about inflation in combination with the professional labor shortage that already was driving costs up & now will further be impacted by employees wanting higher wages for their own costs of living."
"Getting very discouraged. Increasing costs of gas & groceries are taking a huge toll."
Majority of SMBs: Inflation's Worse Than COVID
To show the extent of the issue facing many small businesses, it's important to point out that the majority of poll respondents say inflation has had a more negative effect on their businesses than what COVID inflicted.
When asked what has been more damaging, COVID or inflation, 60% said inflation has been worse. Only 20% said COVID caused more issues.
And other insights expose why several small business owners are falling behind as inflation continues to climb.
Many say their expenses are overwhelming their revenues and cash
reserves. Several SMBs fear passing all of their new costs onto consumers, as they would risk losing more customers.
- 37% of those polled in May have one month or less of cash on hand
- 44% are now earning 50% or less of the monthly revenues they generated prior to COVID
- 49% say their costs have increased by more than 25%, but only 16% are able to charge customers more than 25% to cover those higher expenses
-
52% say their rent has increased over the past six months (up 6% from 46% in April).
This situation is even more challenging for industries that were most affected when local and federal governments enforced COVID shutdowns or other restrictions for months at a time.
Many are still trying to bounce back from those hurdles while confronting a variety of other issues including inflation, a labor shortage, and the still-broken supply chain.
Restaurants, Salons & Gyms Are Most At Risk
Looking more closely at key industries, you can easily see that small business owners across many sectors fear record-breaking inflation could force closures.
As the chart above indicates, nearly three out of four restaurant owners (72%) have expressed concerns that they might not be able to stay afloat if current conditions continue: 1% will close by June's end, and another 49% are highly concerned about shutting down.
Business owners in other industries felt similarly:
-
65% of beauty salon owners are worried
- 3% have already closed
- 1% will close by the end of Q2
- 22% are highly concerned
-
63% of gym owners/fitness trainers
- 29% are highly concerned
-
62% of manufacturers
- 23% are highly concerned
-
60% of artists
- 3% will close by the end of Q2
- 22% are highly concerned
-
60% in transportation (taxi/Uber & Lyft drivers, trucking companies)
- 2% will close by the end of Q2
- 41% are highly concerned
-
59% in construction
- 2% have closed already
- 2% will close by the end of Q2
- 27% are highly concerned
-
57% of photographers
- 3% have closed already
- 35% are highly concerned
-
53% of travel & hospitality professionals
- 1% will close by the end of Q2
- 23% are highly concerned
-
51% of retailers
- 2% will close by the end of Q2
- 26% are highly concerned
-
51% of doctors
- 3% plan to close by the end of Q2
- 31% are highly concerned.
Given these numbers, it is vitally important for everyone to spend more money locally to support nearby merchants and others who provide services supporting their lives and communities.
How Is Inflation Hurting Minorities, Women & Veterans?
Across the board, fears that escalating costs could force companies to shut down are widespread among large percentages of each demographic group.
Sadly, similar to many other polls, disadvantaged groups such as minority-owned businesses, top the chart with 60% saying they're concerned about the negative effects of inflation, 1% will close by the end of Q2, and 36% are highly concerned.
And women-owned businesses are not far behind at 53% -- where 2% have already closed due to inflationary pressures, and another 1% plan to close by the end of June. Of this group, 28% are highly concerned.
Regarding veterans, 49% are worried, and 3% have already closed because of escalating costs and a lack of revenue. Beyond that, 26% are highly concerned.
Nearly half (49%) of nonminority small business owners also are worried, and 1% plan to close by the end of Q2, while another 23% are highly concerned.
Where Are Worries About Inflation-Driven Closures Highest?
Examining this issue geographically, small business owners in Alberta (61%), Maryland (58%), Connecticut (57%) and Tennessee (57%) are most concerned about the negative effects inflation is having on their ability to stay afloat.
In fact, 50% or more of the small business owners in 15 states and two provinces are worried about inflation potentially shutting them down.
Other states on the Top 15 list of most-worried U.S. SMBs include CO (54%), MA (54%), WA (54%), IN (53%), NC (53%), WI (53%), MI (52%), NY (52%), OH (52%), OR (52%), TX (51%), and PA (50%).
In Canada, beyond Alberta, you have Ontario at 54%.
And among the top provinces and states, some have relatively high rates of small businesses that have just closed or are already planning to shut down before Q2 ends.
Those topping that list include Alberta, with 6% of its businesses closing by the end of Q2, and Colorado with 3% that have closed already and another 3% planning to close sometime in June.
Next up, 4% of Massachusetts-based small business owners say they plan to shut down before July.
For Maryland and Washington, that percentage is 3%.
To see other specific poll data related to industries, states or provinces, please contact me at chuck@alignable.com. To see past poll results, go to Alignable's Research Center.
To help your local merchants and other nearby small businesses, please show your support for them and pledge to spend at least 25% more locally. If enough of us take this pledge and act on it, we just might be able to help several of these stores in their fight against inflation. (As you can see here, 95% of our members polled have already taken this pledge).
ABOUT THE ALIGNABLE RESEARCH CENTER
Alignable is the largest online referral network for small businesses with 7 million+ members across North America.
We established our research center in early March 2020, to track and report the impact of the Coronavirus on small businesses, and to monitor recovery efforts, informing the media, policymakers, and our members.
Comments (1-10)
It's extremely tough as a small business right now. We either stand up and get control of the Leadership that is destroying this country or for many its Lights Out.
I work with Healthcare as well as Compliance and switched our services to Virtual Primary Care which can help people with Urgent Situations, behavioral and mental health which give people a lot of peace of mind, Most Importantly ACCESS without going broke on Copays and gas . There are ways to deduct medical expenses for small employers so they can attract employees as well. Sec 105 for Mom and Pop. We are In The Fight so anyone wanting to get together and help others, We Are In! feel free to contact me and we can all work together. Thats How Americans Do IT
These are uncertain times we are entering into again. I work with many businesses in these Industries and they have fought hard to come back after the pandemic and the series of closures and regulations that forced them to spend more money so they could safely service their customers. My head reels seeing what we as a Nation are entering into again.
The survey confirms what I already knew about SMBs in Maryland. 58% fearful of having to close their doors. Many have already have shuttered their doors as a result of lock downs and supply chain issues not to mention that Maryland is not a business friendly state to begin with. Looks as if we are heading for another round of stagflation. The difference between this round and Jimmy Carter's is this round is very deliberately planned.
Part of me says 'well, hopefully we choose to accept this lesson on how printing 40% of the entire money supply in 2 years affects the money's value'...
But the wiser part of me knows this is, unfortunately, not a surprise or accident.
As a farmer with a seasonal business in a rural area without a workforce being we don’t have enough low income housing here or any type of infrastructure for the farmers other then what we have set up and restaurants closing down. Now having to bring our workers from other communities more than 30 miles away and those unable to afford the fuel to get here now is making my business change what we do. As we sell wholesale and retail for u/pick and pre pick we may have to go only to a u/pick operation because lack of workers and the cost to employee them.
We just might be enduring our biggest losses this year as we switch over to u/pick only. Nothing much on this site reflecting what our rural small farms are going through that requires infrastructure to support what they do. If we can’t store our extra products then we lose it!! If food businesses where required to buy local before out sourcing then maybe we would stand a chance at keeping our doors open. But as most products are brought from far away countries and can sell for cheaper then our locals. This only hurts our communities of farmers and rural communities.
I would concur with these findings, I am boots on the ground and I work with small business owners and non-profits and I get the same feedback, only a little more personal level.
We are truly living in some uncertain times.
I totally agree with this article. Inflation has broken small businesses since is hit businesses in the middle of the pandemic. There has to be assistance for our mom and pop shops who are the backbone of our communitites.
It's a vicious circle. Consumers are paying more for almost everything, which means shrinking disposable income. The industries listed as being hardest hit are the ones that are the easiest to cut from a household budget, because while they are nice, they are not necessities. I wish I knew a solution.
Interesting.
Observation 1: A cursory look at the data shows that both Red and Blue states are each in of the "Most Worried" categories. Inflation, like COVID, is an equal opportunity destroyer. The difference? COVID was largely unavoidable. Inflation was largely avoidable.
Observation 2: The two groups of business owners Blue states say they care for the most--Minority-owned and Women-owned--are the ones most likely to suffer most.
Moral of the story? Vote Red.