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QuickBooks Small Business Research: Inflation Concerns, Optimism Grows

Inflation is now the biggest threat to American small businesses, creating widespread cash flow problems, according to the QuickBooks Small Business Insights Report published by Intuit. Yet despite the challenges, small businesses continue to be optimistic about the opportunities on the horizon.

Almost all small businesses (99%) are now concerned about inflation, with one in two saying inflation is a threat to their business today in the QuickBooks survey. As a result, 68% of small businesses report having experienced a cash flow problem. Of these, two in five have already dipped into their cash reserves, 39% have been forced to use personal funds and 38% have used a credit card to bridge the gap.

The Intuit QuickBooks Small Business Insights report also revealed other growing challenges for small businesses:

  • Cybersecurity issues remain at the heart of concerns. More than one in five small businesses (23%) describe cybersecurity as one of the biggest threats they currently face and 42% have experienced a cybersecurity breach. The top three are: malware (18% exposed), phishing (17% exposed) and data breach (16% exposed).
  • Hiring and retaining employees remains a barrier, but raising wages is less of an option for attracting new workers. Nearly half say hiring is getting harder, while 38% say it’s hard to retain skilled workers. In response to hiring challenges, 19% are raising pay for new workers, a significant drop from the December QuickBooks survey, when 44% said they would raise pay.

QuickBooks Notes Positive outlook and opportunities despite challenges

Despite looming challenges, small businesses remain hopeful with 58% currently optimistic about the economy, and if the pandemic shows continued signs of improvement and life returns to ‘normal’ this summer, 79% s expect it to have a positive impact on their business. In fact, many business owners are expecting a big rebound this summer, with almost two-thirds (65%) expecting their business to grow over the next three months. Other findings that point to a brighter horizon for small businesses include:

  • Always high entrepreneurial aspirations: More than one in five consumers (22%) are currently considering starting a business. While not everyone can complete these plans, it’s further evidence of the continued increase in new small business creation first reported by QuickBooks. in December 2021. With April being Financial Literacy Month and this survey confirming that there are so many Americans who aspire to start new businesses, making sure they have the resources and tools they need to get started, manage and grow.
  • Fewer and fewer small businesses are considering raising their prices. Today, just 43% say they plan to raise prices — the smallest proportion QuickBooks has seen since this data was first released in September 2021 and down from 63% in December 2021.
  • Small digital businesses expect higher growth than before. Among omnichannel businesses (those whose online and offline sales are fully integrated), 79% expect growth over the next three months, compared to just 47% for brick-and-mortar businesses. Additionally, 91% of small businesses say it will be important for people to be able to find or buy them online over the next 12 months.
  • Small businesses are hiring and looking for ways to retain talent. More than half of small businesses expect their workforce to grow in the next three months. To help with staff retention, almost half of small businesses (49%) plan to raise the wages of existing workers. Two in five (42%) plan to increase premiums — compared to 36% in December.
  • Small businesses provide benefits and promote equality in the workplace. As business owner confidence improves and the need to invest in and grow their business intensifies, three in four (75%) small businesses now offer employee benefits. The three most common benefits are consistently: paid sick leave, health care, and paid time off.

“Small business owners are always known to be resilient, and despite the challenges we face today, it’s encouraging to see that optimism is high as summer approaches,”

“It’s particularly notable that small businesses that have invested in digital technology feel the most optimistic and that we continue to see high levels of entrepreneurial aspiration.”

Alex Chriss, executive vice president and general manager, Intuit’s Small Business and Freelancers Group.

This report and other research and information from Intuit QuickBooks are available here.

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