Small businesses are foundational building blocks of our economy. From restaurants to corner shops and business offices to construction sites, small businesses provide all-important goods and services for consumers and other businesses while creating jobs throughout the economy. Across the nation and in Nevada, businesses with fewer than 100 employees account for nearly six in 10 jobs, underscoring their importance in the economy.
Given their ubiquity and point of view from the proverbial Main Street of America, small businesses provide a unique perspective on the state of the economy, the business environment and other issues that affect them and their neighbors. For nearly a decade, Nevada State Bank has captured this perspective through its annual Small Business Survey, which aims to better understand the small business point of view on the state’s economic landscape. Our firm has a front-row seat by performing the research and talking with small businesses throughout the state – urban and rural. The latest report provides new insights into the small business community and the challenges and opportunities that it faces on a daily basis. While this year’s survey reflects the lingering effects of the COVID-19 pandemic, it also sheds light on the optimism that small businesses have for the road ahead.
In broad terms, Nevada small businesses were more optimistic about the state economy compared to a year ago, with two in five respondents saying it was heading in the right direction. That was about 60 percent higher than the year before, but it still lagged the pre-pandemic level by a noticeable margin, a sign of the remaining ground to cover in the ongoing recovery. The business outlook among small businesses was positive overall, with four in five saying the Nevada economy would improve or stay the same in the year ahead. Businesses were more optimistic regarding their company finances, with nine out of ten forecasting increased or steady sales revenue through 2022, with just one in 10 expecting a decline in revenue. Similarly, more than eight in 10 businesses expected profitability to rise or remain about the same during the year.
The upbeat expectations are tempered by ongoing challenges with costs of products and services and workforce availability. Over the past year, pandemic-related supply chain disruptions and other factors have driven prices up, and rising costs were the top concern among survey respondents. The economy was the second most-cited concern, followed by hiring and retaining qualified employees.
Workforce availability has been a common concern throughout the nation since mid-2021 as the economic recovery gained momentum. Among Small Business Survey respondents, four out of five businesses said hiring quality job candidates was very difficult or somewhat difficult. Yet neither the difficulty in finding staff nor widescale expectations of continued supply chain disruptions have tempered hiring plans. Two in five businesses said they planned to increase their number of employees in 2022, while only 3.4 percent planned to reduce staff. The intent to hire is a strong signal that businesses believe conditions are ripe for expansion and growth, and they will be looking for the staff to help make that happen. Robust job growth over the past year has already raised statewide employment to within 1 percent of pre-pandemic levels, and increased hiring among small businesses would help push Nevada to a full recovery in the coming months.
Unsurprisingly, finding a qualified workforce was the single most important challenge cited by Small Business Survey respondents, with about 38 percent of respondents citing it as the most important issue for their businesses. That was well ahead of retaining customers/competition (12.5 percent), government and legislation (10.0 percent), and the costs of running a business (9.8 percent). Rising wages and abundant job opportunities have begun drawing workers back to the labor force, a good sign for small businesses that are eager to hire.
Overall, the latest Small Business Survey illustrates the growing optimism that small businesses in Nevada have for the year ahead. The wider impacts of the pandemic are subsiding, and the economy is in full-scale recovery mode, thanks in large part to small businesses. The entrepreneurial spirit of Nevadans was evident in the growth of small businesses throughout the pandemic. Compared to the end of 2019, there were more than 8,000 additional small businesses in the state as of mid-2021 (latest data available), while the number of larger businesses shrank. The growth in small businesses and the accompanying jobs have helped fuel Nevada’s economic comeback and put the state on pace to return to pre-pandemic job levels in essentially two years, proving the importance of the entrepreneurial spirit of small business owners in the overall success of the Silver State economy.
To view the Nevada State Bank 2022 Small Business Survey report, visit nevadasmallbusiness.com/survey.
Members of the editorial and news staff of the Las Vegas Review-Journal were not involved in the creation of this content.