CLEVELAND–(BUSINESS THREAD)–CBIZ, Inc. (NYSE: CBZ), a leading provider of financial, insurance and advisory services, has released the CBIZ Main Street Index for the first quarter of 2022, which takes the pulse and measures the outlook of small and medium-sized businesses. (SMEs). The findings reveal a theme of resilience among employers in the face of persistently high inflation, a tight labor market and persistent supply chain issues.
Sixty-four percent of respondents say inflation remains the biggest burden on their business, but owners are trying to mitigate the problem by shifting added costs to customers and reducing capital expenditures. Almost 70% of companies report that they are taking steps to raise prices, with 20% raising them by 10% or more.
The survey, which was conducted March 22-April 4, analyzes responses from more than 1,400 Main Street businesses with fewer than 100 employees in 27 industries across the U.S.* The index assesses a number of trends timely, such as business sentiment, staffing needs, areas of growth and decline, and adaptation to a changing workplace.
“Small and medium-sized businesses face a triple threat in this economy,” said Kevin Nussbaum, vice president of New Business Development, CBIZ Inc. “Inflation remains near record highs, forcing many of these landlords to pass the cost on to their customers. Unemployment remains stubbornly low, which is becoming an exacerbated problem for some industries, such as ‘hospitality, which are struggling to maintain their workforce at an operational level. Ongoing supply chain issues are also affecting certain sectors. Despite all these challenges, companies remain optimistic.’
The data was evaluated from a global perspective as well as based on company size, region and industry. An interactive infographic with the results is available on the CBIZ website. Key findings include:
- Nearly two in three businesses say inflation is the biggest burden on their operations — 69% say they have or plan to raise prices to combat the rising costs of goods and services. Thirty-seven percent are implementing cost reduction or cost control strategies to keep expenses under control. Additionally, the survey found that 49% of companies will increase prices to increase or improve their business growth, up from 23% last quarter.
- Businesses continue to adapt to ‘Great Resignation’, increasing headcount while staff shortages persist — Staff shortages remain an issue for the third quarter in a row, with 52% of respondents saying it remains a top concern. More than 42% say they are understaffed by at least 10%. On the other hand, the number of employees continued to grow, surpassing the numbers of the fourth quarter of 2021. While the Great Recession presents challenges for SMBs, 45% indicate that they are changing their employee compensation or health and financial benefits packages as an incentive for new applicants and current employees, while 39% have supplemented their workforce with independent contractors.
- Nearly half of companies are addressing issues related to supply chain slowdowns — Forty-seven percent of companies see supply chain-related disruptions as an issue that negatively impacts their business, but are looking at various ways to adapt. 46% are making changes to their operations, while 40% are investing in technology to improve efficiency.
- Strong consumer demand continues to be a driving factor affecting the positive outlook for companies — Main Street companies hold steady with fourth-quarter profit and revenue growth, but continue to see strong growth from prior quarters through 2021. Fewer companies report declines in revenue and profit. Three percent fewer companies report a decline compared to the previous quarter and 8% less since the first quarter of 2021.
- COVID-19 is less of a concern for SMEs two years after the pandemic — The sentiment surrounding the pandemic and its effect on business is beginning to change and is no longer a top concern among the companies surveyed. Twenty-five percent of respondents say they are concerned about the effect a resurgence of COVID-19 would have on their business, compared to 44% of companies surveyed in the fourth quarter of 2021.
*Note: Not all respondents to the CBIZ High Street Index are CBIZ customers.
CBIZ, Inc. is a leading provider of financial, insurance and advisory services to businesses in the United States. Financial services include accounting, tax, government health consulting, transaction advisory, risk advisory and valuation services. Insurance services include employee benefits consulting, retirement plan consulting, property and casualty insurance, payroll and human capital consulting. With more than 100 corporate offices in 32 states, CBIZ is one of the largest providers of accounting and insurance brokerage in the US. For more information, visit www.cbiz.com.