Incfile Survey Shows Struggles, Signs of Resilience Among Small Business Owners in 2021

Against the Odds: Small Business Owners Plan for Growth in the Wake of Higher Costs and Supply Chain Issues We asked Incfile customers about the barriers to growth they've experienced over the last year and how they're working (or planning to work) to overcome them. 66% Have Faced Increasing Operating Costs in the Last Year 1 More than a quarter saw an increase of over 50%. 40% faced steeper operating costs but reported the increase 40% was less than 50%. 34% said they saw no change in operating costs. 34% 26% 26% said their increase was greater than 50%. 70% of Small Business Owners Are Struggling with Supply Chain Issues 2 The supply chain has been compromised all across the nation, and many small businesses are feeling the pinch. 35% said their business has been significantly impacted by COVID-related supply chain issues. 35% said they have been impacted but only “somewhat." 30% reported their business has not been impacted by increased stress on the supply chain. More Than Half of Small 3 Business Owners Struggled with a Pandemic-Induced Labor Shortage But the degree to which they were impacted varied. 23% said it impacted their business somewhat, but they were able to persevere through it. 22% reported they are still struggling with a labor shortage in their industry. 10% said they faced the worst shortage at the start of the pandemic. 45% said mass labor shortages did not impact their industry or business. Those dealing with fallout from the shortages the impact say they're trying to mitig in numerous ways, including: Moving more business operations in-house Y Stopping promotions and marketing campaigns Taking on more responsibilities themselves Hiring temporary employees Less Than a Quarter of Small 4 Businesses Were Able to Expand in the Last Year While a majority of small businesses were not able to expand their product or service offerings in the past 12 months, many have their sights set on future growth. 14% said they want to expand but don't know where to start. 21% said they are gearing up and making plans to expand next year. 24% were able to grow and expand in 2021. 41% said they were not able to expand in 2021. Some businesses sought out collaborations and partnerships to help stay afloat, but most weren't able or aware of how to do so. 5% partnered with other small businesses to avoid closure. :9% partnered to increase their profits. 13% said they didn't know how or where to find partnership opportunities. •14% looked for partnerships but were not able to build any. •58% said they did not look for partnership opportunities. Many Small Businesses Are Looking to Digital Options for Future Growth as Nearly Half of Them Still Haven't Moved Online Over half of small businesses took their business online during the pandemic. Among those that did, their results varied: 28% said it did not significantly improve the business. 9% reported improved sales. 8% reported better customer satisfaction. 6% noted more digital traffic compared to foot traffic in brick-and-mortar locations. 5% reported a bigger profit margin. 4% are considering going back to brick and mortar. The remaining 48% said they have not yet moved their business online. Virtual Address Service Was a Crucial Part of Their Business Around 30% of small businesses utilized a virtual address service in the last year. 12% started using it when they made the switch to an online business. 10% were already using a service prior to 2020. 9% use a virtual address service but use it in addition to a physical address. Of the remaining respondents, 60% hadn't considered it yet and 10% weren't sure how to tell if their business needed it. The Last Year Was a Steep 7 Learning Curve for Many Small Businesses When asked if they felt they had definitive business objectives in place this past year, nearly half did not. 38% said they had no clear business objectives but rather took it "one day at a time." : 10% said it's not possible to have clear objectives in the midst of an economic downturn. .. 30% reported having some idea about their business objectives. · 22% had a clear plan for every quarter. After a tough year, many businesses are looking ahead and are ready to grow in 2022. In fact, some have already begun the process. 27% have started implementing new business processes for smoother operations. 27% will start adding new processes in 2022. 26% said they are not yet ready to begin implementing new processes. 20% don't know what kind of processes will help them operate more efficiently. In 2022, Marketing Will Be Their Biggest Growth Goal More than a quarter of small businesses said that's how they plan to improve sales in the next year. Among other 2022 growth strategies: said they will reduce overhead 24% and operational costs. said they will be more 17% conscious about their business. are not sure what their focus 10% will be. said they're only focused on surviving another year. 9% reported they will look at better pricing strategies. 7% said they're gearing up for inflation with a fool-proof plan. 4% will focus on labor and offering 3% incentives to keep talent. Most Businesses Faced Growth Challenges in 2021, But They're Looking to Make Changes in 2022 Issues with the supply chain, labor shortages and increasing costs were huge hurdles for many small businesses, but having survived the last year, many are ready to make 2022 the year they thrive. Disclaimer: In November 2021, we polled small business owners who are also Incfile customers and compiled insights from 395 respondents. *****