Brand loyalty can be one thing. But when it is directed at small businesses, it is a benefit to the entire community.
A small business relationship with its customers is special. It is rarely transactional. 37% of Americans said they buy from small businesses because they get a better experience. According to NerdWallet’s new survey, 37% of Americans are willing pay more, and 30% will wait longer at small businesses than major retailers or chain shops, a total of 33,000 adults were surveyed online by The Harris Poll between Oct. 5th-2022.
Small businesses often feel the effects of economic stress in tandem with customers. Customers may not visit as often, prices and offerings might change, and staff members may leave.
We have just completed a survey of small-business owners.
Kelsey Sheehy, NerdWallet’s small-business specialist, says that small businesses can be particularly affected by economic turmoil. Consumers have less money to spend due to rising costs, so many people put off big purchases. Business owners also find it more costly to purchase everything. To weather the economic uncertainty .”
According to a survey of 906 small business owners, 55% of small businesses say that finding and retaining customers is their biggest challenge. The economy is also facing challenges. 37% of small-business owners mention inflation, while 30% list finding supplies or inventory as the most pressing issues their business faces right now.
These are the challenges that customers are seeing. According to the survey, four in ten Americans (40%) said they have seen small businesses close down within their community in the past 12 months. 40% of respondents said that they have seen higher prices, while 38% reported staff shortages at small businesses they support.
Small businesses are looking for ways to adapt to the economic downturn. Nearly three quarters (31%) of respondents say that they have adjusted their operating hours in recent economic times.
Americans support small businesses. More Americans than 9 out of 10 (92%) support and spend money on small businesses. According to the survey, three out of ten Americans (30%) said they would pay more for services and products purchased from small businesses than at major retailers or chain stores.
Small businesses in today’s economy
Small-business owners are facing a difficult time. Supply chains are congested, inflation is high, and interest rates are high. Many of these limitations will not ease soon. Although 55% of small-business owners believe finding and/or keeping customers is the greatest challenge facing their business, many other problems they point to are directly related to the economy.
Over a third of small-business owners (37%) say that rising costs for their supplies and inventory (i.e. inflation) are the greatest challenges they face right now. These owners thrive on relationships with their customers so it’s not surprising that they are concerned not only about their bottom line but also their patrons. According to 27% of small-business owners, passing higher prices onto their customers is one of the greatest challenges they face right now.
Supply Chain Disruptions
According to the survey, three out of ten small-business owners (30%) say that finding supplies or inventory (i.e. the supply chain) is the greatest challenge their business faces right now. 25% of small-business owners say that receiving inventory and supplies in a timely fashion is a major challenge. These aren’t new issues — supply chain problems have been present for many years. They started with shutdowns during the pandemic, and continue to this day due to global turmoil.
After a time when job postings were far more numerous than the workers available to fill them, the labor market is starting to slow down, although it’s not as drastic. However, almost one-quarter (23%) small-business owners believe that finding and keeping workers is their greatest challenge right now.
Rates are increasing in an attempt to lower inflation. This makes it more difficult for small businesses to raise capital. 24 percent of small-business owners say that finding loans for their business or other resources to cover current costs or grow is the biggest challenge they face right now. 82% of respondents say they have difficulty accessing such funds, including loans, grants, and 79% agree. Access to such funds (e.g. loans, grants, etc.) is crucial for their success. 59% of respondents say it’s essential or very important.
Sheehy states that small businesses are being negatively affected by the stress of inflation. Sheehy also points out that supply chain problems and staffing issues have been piled on top of each other. Owners need help, but it has not been easy to get one. Many are having difficulty getting business loans and those that are approved are facing higher borrowing costs .”
Customers are beginning to notice the effects of these concerns.
40% Americans have seen small businesses close down in their community in the past 12 months.
40% of Americans noticed higher prices for small businesses that they support over the past twelve months.
38% Americans claim they have noticed staffing shortages in small businesses they support over the past 12 months.
How small businesses manage the costs of doing business
Small-business owners recognize that financial stressors can have serious consequences for everyday business. Many are acknowledging what customers already notice: 33% say that they have increased the prices of goods and services in order to deal with changing economic conditions over the past 12 months.
One-third (33%) of small-business owners claim that they have increased their social media presence over the last 12 months in order to adapt to recent economic conditions. This could be a sign that entrepreneurs are looking to expand their customer base by starting an online business, just like in the early days of the pandemic.
Sheehy states that social media is an excellent tool for small businesses to reach new customers as well as keep in touch with their existing customers. Sharing new products and specials encourages people to shop with your business. It makes them happy. It’s a great way to get people excited about small businesses by sharing photos with customers or reposting pictures when customers tag you on social media.
What’s most important for small-business customers
Small-business owners still have reason to be optimistic despite all this. 92% of Americans support small businesses (i.e. spend money on) them, compared with 92% of Gen Z (ages 18-25), 92% of Gen X (ages 42-57), and 89% of baby boomers (89% – 58-76). This support rate is especially high among millennials (26-41) — 96% support small businesses, compared to 92% of Generation Z (18-25), 92% (ages 42-57), and 89% (ages 58-76 span>
Nearly half (52%) Americans say that they buy from small businesses in order to support their local communities. This is a positive sentiment that indicates they realize the potential impact of the dollars they spend with them.
Small-business supporters are more willing to spend more time and money supporting these institutions than major retailers and chains. 30% of Americans will wait longer to get service from small businesses than major retailers or chain shops, while 30% will pay more to buy products at small businesses than major retailers.
This sentiment is particularly prevalent among millennials. 37% of them are willing to pay more to buy products/services from small businesses than major retailers. Among the other generations, 33%, 27%, and 24% respectively of Gen Z and Gen X are willing to pay more.
These results could indicate that some consumers think the benefits of supporting small businesses are worth the extra costs.
Lessons from small-business owners
It’s still a good idea to use the old-fashioned approach. Americans respond to the question of how they found small businesses that they support. They mention traditional methods such as word-of mouth (56%), local advertising (41%), and driving by or walking by them (40%) Although 42% of respondents say that social media is the main way they find small businesses to support, these tried and true methods still work.
For more information on how people find small businesses, please visit .
Small businesses will likely benefit from a strong Social Media Strategy . However, these efforts should be combined with traditional advertising and marketing methods.
Small-business owners need to cultivate this personal touch. 37% of Americans said they buy from small businesses because they feel more connected with their customers. It’s more than the products or services that you are buying.
Your patrons should feel appreciated. Small customer appreciation events are a good idea. Remember their names and take the time to talk with them. This relationship-building encourages loyalty that remains even if inventory is low or prices have to rise.
Participate in the community (not just in it). Small-business owners should be involved in the communities they serve.
Being visible in your local community does not have to be about buying billboard space. It could also mean sponsoring a local 5K or having a booth at local fairs.
Make a statement about holiday shopping sales. 35% of Americans shop at small businesses all year, but only 19% shop at small businesses on Small Business Saturday. Black Friday, Small Business Saturday, and other holiday sales are important to your business, make sure you’re promoting them. If you believe holiday sales (e.g., Black Friday, Small Business Saturday, etc.) are essential to your business’ success, 73% of small-business owners agree. Make sure that you communicate this to your customers.
Make the shopping holidays an event, not just a sale. Everyone loves freebies and snacks. Make sure you let people know when you are planning to hold a sale. You can let your customers know that you have something in the works, whether it’s through radio advertising or social media.
Communicate your concerns and be transparent. Customers will likely rate your business differently to others than you. The survey revealed that many Americans are more willing to wait and pay more for small businesses than larger ones. They value the local impact and the personal touch.
It’s okay to communicate information about economic conditions that could affect your bottom line. A price rise is more likely to be received if it is communicated ahead of time as a difficult decision, rather than when the total is rung up and invoices are issued.
Sheehy suggests that customers should look at the reasons they choose small businesses over larger ones: their personal experiences and sense of community. Don’t be afraid of revealing the “why” behind pricing changes, inventory changes, and explaining the reasons. Your span customers should have the opportunity to support you span>
The Harris Poll conducted this survey online in the United States for NerdWallet between October 3-5, 2022 among 3,037 U.S. adults aged 18 and over. 906 of these individuals currently own small businesses. A Bayesian credible interval is used to measure the sampling precision of Harris online surveys. The sample data for this study is within +/-2.8 percentage points using a 95% confidence limit. Alikay Wood, [email protected] can provide more information about the survey methodology including subgroup sample sizes and weighting variables.