Due to “cumulative pressures” of inflation, rising interest rates, fears of a recession and bank failures, small business owners polled by Alignable are experiencing fading optimism. Those polled are seeing lower sales, profits and customer counts — resulting in struggles to pay rent.
Chuck Casto, head of research, corporate communications and news at Alignable, said the current state of small business “can be summed up best with two words: economic backslide. Casto said the survey tapped 4,235 randomly selected small business owners. He said historical responses from another 695,000 small business owners were also included in the report.
The study found that 74 percent of respondents are concerned about rising interest rates, while 27 percent said current interest rates have already hurt their businesses. Alignable stated in the report that “only 34 percent of small business owners are earning as much or more than they did prior to COVID-19, now three years after the initial impact. And that statistic has dropped four percentage points from 38 percent [in the January report].”
Casto said the states with the lowest recovery rates were Kentucky, Georgia, New York, Washington, Illinois, Texas and California. By industry, the worst recovery rates were transportation, events, gyms, the arts, retail, restaurants, beauty salons and real estate.
“While 53 percent remain more optimistic about 2023 than 2022 (down three percentage points from 56 percent in January), pessimism has surged seven percentage points from 14 percent in January to 21 percent now,” Casto said.
Meanwhile, falling profits due to ongoing inflation is a top concern. Seventy-five percent of those polled said inflation continues to hurt their business. And it’s not just the bottom line. Forty-eight percent of respondents said they earned “half or less of the sales they generated monthly prior to COVID-19. That’s nine percentage points worse than it was in January at 37 percent,” Casto said.
As a result, 39 percent of those polled said they couldn’t make rent, which is 9 percentage points higher than in the January survey. Additionally, 53 percent of respondents said they were paying more for rent as compared to six months ago.