88% of Small Business Owners Say Inflation Is Impacting Their Business, According to Bank of America Small Business Owner Report
Despite Concerns, 64% of Entrepreneurs Anticipate Revenue Growth and Business Expansion
A majority of small business owners report that inflation and supply chain disruptions are impacting their businesses, according to the Bank of America 2022 Small Business Owner Report. The survey of more than 1,000 business owners across the country—now in its 10th year—found that business owners are navigating operational challenges including price increases and loss of customers. Despite these difficulties, business outlook remains strong, with 64% anticipating their revenue will increase in the year ahead.
Conducted in March and April, the survey found:
- 88% of business owners say inflation is currently impacting their business
- 76% say supply chain issues are impacting their business
- 31% are confident the national economy will improve, down from 50% in 2021
- 39% are confident their local economy will improve, down from 56% in 2021
“Small business owners are betting on their businesses and seeking opportunities for expansion, despite concerns about the economy,” said Sharon Miller, President of Small Business and Head of Specialty Banking and Lending at Bank of America. “While facing a highly challenging environment, entrepreneurs are demonstrating resilience and adaptability as they focus on the operational and strategic decisions that directly impact their customers and employees.”
Economic Concerns and Recovery
Business owners are primarily concerned about key economic factors including inflation (80%), commodities prices (75%) and supply chain disruptions (64%), and this anxiety is dampening their overall outlook. Concerns over commodities prices, international affairs (61%) and interest rates (57%) all rose sharply this spring, while concerns over health care costs (57%) dipped to their lowest levels in the history of the SBOR.
While new challenges loom, entrepreneurs reported a steady recovery from the initial impacts of the pandemic. More than three-in-five business owners (62%) feel their business has fully or partially recovered from the pandemic, and nearly half (48%) cited increased consumer spending over the past year as a key driver in their recovery. Additionally, 70% of business owners plan to seek financing for their business in the year ahead, and 26% plan to hire, the highest percentage since fall 2018.
Inflation, Supply Chain and Labor Impact Operations
Most entrepreneurs say they’ve raised prices to sustain their business due to the impact of inflation and supply chain disruptions:
- Nearly nine out of 10 (88%) business owners are feeling the impact of inflation, leading them to: raise prices (68%); reevaluate cash flow and spending (34%); lose sales (31%)
- Three-quarters (76%) of business owners reported supply chain issues are impacting their business operations, causing them to: raise prices (58%); face difficulties sourcing products and supplies (49%); delay delivery of goods and services (43%)
- Owners are also experiencing labor shortages, with 41% reporting impacts to their business, including the need for them to work more hours and difficulty filling open positions.
Interest in Emerging Technologies
Looking to the future, entrepreneurs believe new technologies will be critical to business growth and risk reduction. Business owners believe that cybersecurity platforms (57%), 5G (50%) and automation (39%) will be important for business success in the next decade. Business owners are also preparing to adapt their sales strategies to a digital-first world and, in the decade ahead, 44% plan to prioritize digital sales over brick and mortar.
Meanwhile, 70% of business owners have adopted new digital tools and strategies for their business in the past 12 months, including more business banking online or via mobile apps (52%), and accepting more forms of cashless payments (43%).
A Decade of Change and Commitment
This year marks the 10th anniversary of the SBOR. Over the last decade, business owners have operated in a challenging but rewarding business environment. A majority (72%) feel business ownership has become more difficult over the past decade, largely due to a dynamic and more competitive business landscape. Despite which, nearly half (46%) of entrepreneurs say they have been able to spend more time with their family, and 37% have set aside more personal wellness time, compared to a decade ago. Many entrepreneurs today (46%) are even in business with their spouse or partner, with the vast majority (96%) enjoying running their business together.
For an in-depth look at the insights of the nation’s small business owners, please read the full Bank of America 2022 Small Business Owner Report.
Providing a Business Advantage to Small Business Owners
Bank of America provides advice, solutions, access to capital and dedicated support to meet the unique needs of our 11 million business owner clients. According to the FDIC, Bank of America maintained its position as the nation’s top small business lender at the end of 2021, with $34.8 billion in total outstanding small business loans (defined as business loans in original amounts of $1 million and under).
Bank of America 2022 Small Business Owner Report
Ipsos Public Affairs conducted the Bank of America 2022 Small Business Owner Report survey online between March 22 and May 1, 2022 using a pre-recruited online sample of small business owners. Ipsos contacted a national sample of 1,037 small business owners in the United States with annual revenue between $100,000 and $4,999,999 and employing between two and 99 employees. In addition, approximately 250 small business owners were surveyed in each of ten target markets: Atlanta, Boston, Chicago, Dallas, Houston, Los Angeles, Miami, New York, San Francisco and Washington, D.C. The final results for the national and designated market area segments were weighted to national benchmark standards for size, revenue and region.
Prior to 2016, previous waves of the Small Business Owner Report survey were conducted by telephone and while best efforts were made to replicate processes, differences in sample, weighting and method suggests caution when making direct statistical comparisons of the results from pre-2016 and post-2016.
Inland Empire job market fully recovered from pandemic as supply chain employment continues to grow
The Inland Empire job market recovered faster than anywhere in Southern California, with payrolls and a labor force climbing above pre-pandemic levels, according to a new economic report.
The report, released Thursday by the Southern California Association of Governments (SCAG) as part of its 13th Annual Southern California Economic Summit, documents San Bernardino and Riverside Counties’ growth as a global supply chain hub, adding 63,700 jobs in transportation, warehousing and wholesale trade since shortly before the pandemic. Other major employment gains have been reported in leisure and hospitality, which has fully recovered from its early pandemic losses and is up 17,600 jobs year-over-year, and the government sector, up 9,400 jobs year-over-year.
“Barring a recession, the Inland Empire labor markets will continue to perform well,” said Dr. Manfred Keil, Chief Economist for the Inland Empire Economic Partnership. “Clearly, the two-county region’s role in the supply chain is driving much of this, though sustaining growth in the long-term would benefit from prioritizing a diverse range of industries.”
Keil is part of a new Economic Roundtable convened by the SCAG – which hosted the Summit in downtown Los Angeles – to provide both a snapshot of the region now as well as a preview of economic opportunities and challenges ahead. Their research was compiled in a report that offered caution on turbulence ahead from global forces, but also promise that Southern California is better positioned than other regions to withstand it.
Among the factors that could moderate the impacts of a possible recession across the six-county SCAG region:
- Continued growth in core industries, such as information, logistics and tourism
- Measurable increases in labor productivity in 2022
- New development and construction in infrastructure and housing, both public and private
- Household debt and real estate values that are less likely to decline than elsewhere
“With improvements in the global inflation picture, combined with continuing 2022’s positive momentum, the region’s economy raises hopes that the much-anticipated global recession of 2023 will not severely impact Southern California,” said Dr. Gigi Moreno, Senior Economist at SCAG.
However, threats do remain. In the Inland Empire, housing affordability and rising interest rates are among the biggest challenges. Even as home sales have fallen for the past 15 months, higher prices and mortgage rates have reduced affordability by one-third, Keil said.
“Housing affordability becomes an even bigger issue as more and more people move to the IE, forcing prices up even higher,” Keil said, noting studies that have shown the Inland Empire among the fastest-growing population centers in the country.
Click here for the complete Southern California Economic Update.
From Goats to Soaps
An Inland Empire small business journey to responsible, clean beauty products
By Jessica Anguiano, Southern California Outreach Manager, Small Business Majority
Of all the ways of starting a new business, one that included the purchase of a Nigerian dwarf goat named Barnaby was not on the mind of Michele Jimenez. As the owners of a ranch in Riverside, Michele and her husband wanted to teach their five young daughters about caring for and raising farm animals, and Barnaby would be a perfect way to do just that.
After learning about an Inland Empire 4-H youth development and mentoring organization, Michele enrolled her daughters, ages 2 to 15, to learn about responsibilities and appreciation for nature. During the training, the young girls focused on agricultural project-based learning and chose to launch a dairy goat breeding program as their project. But after their goat population began to grow, they faced an unimaginable challenge: what to do with 3-5 gallons of milk per goat on a daily basis?
The children were quick to propose an avenue: cook and create recipes with goat milk. The idea seemed simple at the time, but they soon realized that goat food products are an acquired taste–which meant this wasn’t a recipe for success. By this time, the COVID-19 pandemic had paralyzed businesses in Riverside, and like everyone else, Michele’s daughters followed lockdown protocols and stayed home. Michele and her daughters began making soap with goat milk at home with not much to do and nearly 30 goats in stock.
At first, they gave away the soap to friends and family to see how their prospective customers would respond to this new product. And then after only [est. time], the Jimenez Sisters Ranch business was up and running, full steam ahead.
The family-owned small business exemplifies the core values of the Jimenez family: resilience, entrepreneurship, sustainability, and a fond appreciation for eco-friendly, socially responsible, and ethically sourced practices and products. In addition to stylish apparel and accessories, the Jimenez sisters sell handcrafted goat milk soaps, lotions, and creams to consumers and wholesale retailers throughout California and across Wisconsin, North Carolina, New Mexico, Louisiana, and Washington.
“My daughters have been the face of the Jimenez Sisters Ranch since its inception. I’ve encouraged them to take an active role in the business, despite their age. They deserve a seat at the table and I believe they can confidently shape their future as entrepreneurs,” said mom Michele. “Small business ownership comes with its own set of challenges and opportunities and for us, it has turned into a new source of income, inspiration and a great way to start building generational wealth.”
As the Jimenez family continues to navigate business ownership and with plans of scaling up, they are actively looking for ways to lower prices on low-volume purchases and sourcing raw materials ahead of the holiday season. Michele says, “We’re a solutions-oriented business, so we’re networking and connecting with leaders in the industry to get us in the front door. Although our competitors are beauty industry giants, we know what we offer and what sets us apart–our clean, beauty products.” This holiday season and ahead of Small Business Saturday, the Jimenez Sisters Ranch is offering a 25% discount on storewide buttercream purchases through the Small Business Majority’s holiday gift guide.
With the support of their community and peers, Michele and her family have made a number of appearances on TalkShopLive, a live streaming, social buying, and selling platform. By showcasing her small business on this platform, Michele hopes to reach more customers to eventually set up her business as an international exporter. She believes in the power of supporting women’s entrepreneurship, which is why she’s advocated and spotlighted the need for funding Women’s Business Centers. Michele explains, “these centers provide the tools and resources that entrepreneurs like my daughters and I require to scale up businesses and are an important source of community building.
20 Years of Spirit in the Making
Inland Empire visionaries, innovators, problem solvers, and risk-takers have been celebrated center-stage at the Spirit of the Entrepreneur Awards black-tie gala for two decades.
The Spirit of the Entrepreneur Awards recognizes the accomplishments and resilience of local entrepreneurs who have strived to build businesses into major contributors to the Inland Empire’s economy. The program was founded in 2003 by Mike Stull, Director of the Inland Empire Center for Entrepreneurship (IECE) at California State University San Bernardino (CSUSB), and in the years since, more than 200 entrepreneurs have been honored with a Spirit of the Entrepreneur Award.
The IECE, established in 1999, has always been ahead of the curve and launched the Spirit of the Entrepreneur Awards eight years before President Barack Obama designated November as National Entrepreneurship Month in the United States. Dr. Mike Stull came up with the idea for the awards shortly after becoming director of IECE, when he discovered students in the CSUSB Entrepreneurship program couldn’t name any local entrepreneurial role models.
“Similarly, in my many conversations with leaders in the community, none could cite successful entrepreneurs that were key drivers to the local economy,” Stull said. “To me, this represented a significant gap — we have many successful entrepreneurs in the region, and our students and community leaders needed to know who they were. Thus, I endeavored to bring an event to life that would celebrate and honor local entrepreneurs in a format that would be inspiring, fun, and entertaining. Hollywood had the Academy Awards, so why couldn’t we have a similar event focused on entrepreneurs!”
The annual Spirit of the Entrepreneur black-tie awards program — held this year on November 17 at the Riverside Convention Center — starts with networking receptions, where mingling can often lead to deal-making. The main event is a mix of entertainment, with performances by acclaimed musicians and performers, heartfelt acceptance speeches from featured award recipients from categories such as General Entrepreneur, Service-based Entrepreneur, Social Entrepreneur, Emerging Entrepreneur, and The Mary Anne Fox Top Female Entrepreneur of the Year. At the end of the program, one recipient will also receive the Best of the Best Award, sponsored by Best Best & Krieger LLP. This honor goes to the person who best exemplifies what it means to be an entrepreneur.
“We come up with award categories in two ways,” Stull said. “First, over the 20 years of the program, we have developed a large number of standard categories that capture just about every type or industry represented in the region. Second, each year we carefully review all the submitted nominee profiles and adjust or add award categories as appropriate. For example, in recent years we have added a Healthcare Entrepreneur category, and in some years we have so many great manufacturing company nominees that we segment them by focus area, such as consumer products manufacturing and industrial manufacturing.”
In order to be nominated, a person must meet two requirements: they need to have been in business for at least two years and have a minimum annual revenue of $400,000. Beyond that, they should be an innovator with a solid character known for having an entrepreneurial mindset and a record of strong leadership and performance. Judges, who are selected based on their business experience and integrity, work independently of one another to evaluate the nominees, with almost all being previous winners of a Spirit of the Entrepreneur Award.
Several notable names have received the signature Spirit Award — Garner Holt, founder of Garner Holt Productions, the late Stater Bros. CEO Jack Brown, and the late Baker’s Burgers founder Neal Baker all were honored with Lifetime Achievement Awards. Looking back on the last 20 years, Stull has countless fond memories of ceremonies past, including performances by Eddie Money and Troy Clarke & His Big Band Orchestra, but his favorite just might be when Holt was recognized with this Lifetime Achievement Award in 2019. “We completely surprised him, and his emotional speech was one for the ages,” Stull said.
When the winners are revealed, Stull hopes they feel “all the great positive emotions at once. Surprise, joy, excitement, happiness, pride, gratitude — all those we tend to see from the moment their name is announced to the completion of their acceptance speech. It gives us no greater satisfaction than to see entrepreneurs be overwhelmed at that moment and realize that their hard work and commitment are being recognized in front of their families, team members, the business community, and their peer entrepreneurs. As one past award recipient told me, ‘Mike, this is the pat on the back and recognition that we hardly ever get as entrepreneurs.'”
To celebrate the 20th anniversary, there will be a few surprises during this year’s ceremony, with the biggest being the announcement of the Spirit of the Entrepreneur Legacy Awards. Two previous Spirit of the Entrepreneur Award recipients — one from the first ten years, and one from the second — will be selected by a judging panel for this special, one-time-only honor.
“The Spirit of the Entrepreneur Awards has reached an incredible milestone, and we hope that everyone comes out to join the celebration,” Stull said. “Our last full-scale event prior to the pandemic had over 1,000 attendees, so we’d love to see a record turnout in 2022.” Starting with the very first ceremony in 2003, “the event wouldn’t be possible without the incredible nominations we get each year, and of course, the fantastic support we get from our sponsors,” Stull added. “We have nine sponsors that have supported us for more than 10 years, and two that have been with us for 16 of our 20 years.”
The Spirit of the Entrepreneur Awards isn’t solely about recognizing the ingenuity of Inland Empire business leaders. Proceeds from the event go to the IECE’s Spirit of the Entrepreneur Scholarship Fund, which provides grants to the next generation of entrepreneurs. Since 2003, more than $225,000 worth of scholarships have been awarded to CSUSB students with measurable needs who are studying entrepreneurship.
CSUSB students also have the opportunity to participate in the Garner Holt Student Fast Pitch Competition. Every year, the IECE holds this innovative semi-final qualifying competition at the event’s named sponsor’s headquarters – Garner Holt Productions a week prior to the Spirit Awards gala. Up to 15 student entrepreneurs have the chance to give a 90-second pitch of their business idea to local investors. The students are judged by the panel, and the top five student pitchers move on to the finals at the Spirit of the Entrepreneur Awards. There, they deliver their pitches in front of the live audience, where the audience will vote to determine the winner who will receive the $4,000 cash prize. In years past, students who presented especially impressive pitches have dazzled investors in the crowd and secured funding for their ventures.
Purva Taur is a graduate assistant at IECE and enrolled in the Master of Science Entrepreneurship and Innovation (MSEI) program at CSUSB. An international student from India, Taur grew up in a family where many of her relatives owned businesses, and she knew that one day, she would follow in their footsteps. By working at the IECE with Stull and Assistant Director Stacey Allis, Taur has already noticed a change in how she approaches situations.
“I’ve learned how to be on my toes all the time,” she said. “If there’s a problem, you have to be quick with a solution and back up.” Taur is now working on a business plan to present in front of investors and feels that the comprehensive education she is receiving will give her a boost over her peers. “Being in this program has given me a lot of confidence that not every 22-year-old would have to begin their start-up, or any business,” she said. “I’ve learned how important it is to cultivate your business mindset.”
While Taur is preparing to launch her career, one CSUSB student-led venture named AxoTech is already commercializing technology developed by the Naval Surface Warfare Center in Corona.
“The company is innovating the diagnostic technology space, and is currently a part of the National Security Innovation Network (NSIN) Foundry program,” Stull said. “Overall, the impact to the region is tangible — over 40 percent of our more than 1,000 entrepreneurship alumni have created one or more ventures since graduation, and a large number of our graduates are intrapreneurs: managers and leaders in existing organizations who are innovative changemakers.”
IECE HAS IMPACT
The IECE has been leading the charge since it first opened its doors at CSUSB, with the mission of inspiring, developing, and nurturing up-and-coming entrepreneurs in the Inland Empire. It is the largest organization in the region supporting small business and entrepreneurial growth, and its staff is there every step of the way as people learn the ins and outs of starting and running a business, meeting with investors, finding mentors, and developing business models.
“We have an incredible team of professionals in the IECE — more than 60 — that are in the community every day having an impact on startup and existing companies,” Stull said. “The IECE has been recognized many times for its growth and impact, most recently by AACSB International, the accreditation body for business schools worldwide, as a Top 35 Program for Fostering Entrepreneurship and Innovation.”
There is always something in the works at the IECE, and in 2021, the center collaborated with the CSUSB School of Entrepreneurship to produce the region’s first-ever State of Entrepreneurship Report, which examined the trends and challenges of entrepreneurship in the Inland Empire. This year, the IECE has launched several new initiatives, including the Catapult Business Growth Network. Over the course of this intensive six-session program, entrepreneurs learn how to position their businesses for measurable growth.
The IECE is a driving force behind the economic expansion in the Inland Empire, and the proof is in the numbers — through its counseling, mentoring, and training programs, the IECE has served more than 150,000 entrepreneurs, supported the creation and retention of nearly 40,000 jobs, assisted with the startup of almost 2,000 new ventures, and had an economic impact in excess of $400 million.
“We are very proud that the IECE has grown to become one of the largest university-based Centers for Entrepreneurship in the world,” Stull said. “Since entrepreneurship is such an important driver of our local economy, having such a vibrant and impactful program such as the IECE is critical to supporting local businesses and their startup and growth.”
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