What are the biggest challenges small-business owners are facing?

Although many small-business owners are feeling more optimistic and looking forward to 2024, concerns continue regarding the economy, labor market and supply chain issues.

The U.S. Chamber of Commerce shares the following five biggest challenges small-business owners are facing.

1. Inflation. Rising inflation is a significant challenge for small-business owners, who have less leverage when it comes to buying power compared with larger competitors. Yahoo Finance reports “nearly 80% of small-business owners say their expenses have increased by 6% or more,” leading small businesses to boost prices and cut expenses. Many small businesses are turning to additional financing to stay operational.
2. Access to credit. A survey by Goldman Sachs found more than three-quarters of small business owners are concerned about their ability to access capital; one year ago, 77% of respondents said they were confident about their access to capital. Small businesses disproportionately rely on smaller banks as a source of funding, and the closure of regional banks affected small-business ventures that did not even patronize such banks.
3. Rising interest rates. Although small businesses are less concerned about interest rate hikes compared with last quarter, rising interest rates remain a significant challenge. Fifty percent of small businesses report they have delayed plans to grow their business because of rising interest rates.
4. Hiring and employee retention. Economic pressures are making it more difficult for small businesses to retain talent and attract new hires as companies struggle to compete with large businesses and keep up with employee salary expectations.
5. Supply chain disruptions. Pandemic-era supply chain delays continue to be a challenge for some small businesses; in 2023, 23% of small businesses said supply chain issues are a top concern. Small businesses do not have larger businesses’ financial ability to work around supply chain issues, and experts say economic conditions, rising inflation and global tensions will continue to create supply chain challenges for small businesses. Some small businesses have switched to domestic suppliers to try to alleviate the problem.