'We made it through.' Small business owners are optimistic but still face challenges almost two years into the pandemic

The Covid-19 pandemic has been far from easy for small business owner Briana Thompson.

Her Brooklyn, New York-based boutique spin studio, Spiked Spin, had only been open for a few months before the crisis hit. It wound up being shuttered for more than a year, reopening in May 2021.

Then, the omicron variant took hold of the city, which forced her to close her doors again in early December for a few weeks.

“I felt that shock of fear again, where we were like, what does this mean?” said Thompson, 32.

Fortunately, the studio reopened at the beginning of January. The entire experience, which includes draining her savings and personal emergency fund, has made Thompson more determined to bring health and wellness to underserved communities, her company’s core mission. Yet, she knows there may be more disruptions on the horizon.

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“As much as we are now ‘prepared’ to understand the virus a bit, I know that we really don’t,” Thompson said.

“I hope we can get it under some kind of control, but we are not moving in fear.”

Fully 71% of U.S. small business owners said the recent rise in Covid-19 cases has negatively impacted their business revenue, according to a survey by Goldman Sachs. The poll of 1,466 Goldman Sachs 10,000 Small Businesses participants was conducted by Babson College and David Binder Research from Jan. 10 to 13.

There were 31.7 million small businesses in the U.S. as of October, according to the U.S. Small Business Administration, comprising 99.9% of all firms. Eighty-one percent of small businesses have no paid employees while19%, or 6 million firms, do.

To be sure, generating enough revenue is the biggest post-pandemic challenge facing owners, according to the Small Business Index from the U.S. Chamber of Commerce and MetLife. Inflation and complying with Covid-19 safety protocols also were top concerns.

Yet there is optimism. The Small Business Index notched its highest reading since the pandemic struck, with a score of 63, up from its record low of 39.5 in the second quarter of 2020.

“Employers are stuck between this long-term positive outlook and recognizing that growth is on the horizon, and omicron and these temporary bumps along the road to recovery,” said Luke Pardue, an economist at payroll and benefits provider Gusto, which services small and medium businesses.

For many small business owners, rising inflation means either increasing prices or taking a hit on profits. The Producer Price Index, which measures wholesale prices for goods and services, jumped nearly 10% in 2021, according to the U.S. Bureau of Labor Statistics.

Three in 5 small business owners have had to raise prices in the past year, according to the Small Business Index. Some have taken out loans or decreased staff to manage higher costs brought on by inflation.

For Thompson, raising prices at Spiked Spin isn’t an option, since she’s trying to remain accessible to her community. Therefore, she’s had to make some tough choices as she updates her current studio and plans to open a new one in Atlanta.

“I’m constantly weighing where do I make the best use for this funding and how will I see the best return from a client perspective,” she said.

The supply chain disruptions that have plagued small businesses since the pandemic began don’t seem to be going away anytime soon.

Fully 69% of owners believe those issues have negatively impacted their bottom line, the Goldman Sachs survey found. Most also believe suppliers are favoring large businesses over small businesses due to their larger volume of orders.

Finding and retaining qualified employees is also big challenge for small businesses right now. Of those currently hiring, 87% are finding it difficult to recruit qualified candidates for open positions and 97% said it is impacting their bottom line, according to the Goldman Sachs survey.

Since small businesses can’t always compete with big companies when it comes to wages, they are resorting to different tactics to attract and retain talent, Pardue said. That includes adding financial benefits and vaccine mandates.

“When owners are unable to raise wages, they can take these steps that protect workers’ financial and physical health and it results in increased retention and hiring,” he said.

Among women business owners who have such a mandate, 31% report having difficulty hiring, compared to 43% of those who don’t require a vaccine, a survey by Gusto and National Association of Women Business Owners found.

Despite the past turmoil and potential roadblocks ahead, 77% of small business owners are optimistic about the future of their business, according to the Small Business Index.

The dichotomy can be attributed to confidence in entrepreneurs and innovation to solve problems, especially in the face of the small business boom that began during the pandemic, said Tom Sullivan, vice president of small business policy at the U.S. Chamber of Commerce.

Nearly 5.4 million new business applications were filed in 2021, a new record, according to figures from the Census Bureau. That’s up from 4.3 million in 2020.

“It took four months to bend the curve up during the pandemic,” Sullivan said. “It’s really remarkable.

“That leads to the optimism, the optimism that despite all these headwinds …. that power of innovation, that power of entrepreneurs to solve problems and therefore, create businesses overwhelms the headwinds,” he added.

Thompson believes that optimism is a direct result of having survived the pandemic.

“I went through a phase of feeling very down, very uncertain, but we made it through,” she said.

She’s now moving forward with her plans to open a second studio and roll out digital offerings.

“I feel very excited for the future of the business,” Thompson said.

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