A recent survey by Goldman Sachs’s 10,000 Small Businesses Voices has painted a grim picture for small business owners this holiday season. According to the survey, a staggering 77% of small business owners reported no increase in holiday sales, while 55% stated that their profit margins have decreased over the year.
These disappointing sales figures and tighter profit margins have affected the personal spending plans of 70% of small business owners. Many small business owners are feeling the pinch, with economic conditions and their financial outlook negatively impacting their household’s purchasing power.
Despite indications of slowing inflation from Federal Reserve data, small businesses continue to feel the pressure. A significant majority – 82% – of small business owners reported having to raise prices in the past year, while 66% find it challenging to absorb inflationary pressures and keep prices low.
Alexzandra Denis, owner of Avalah in Brooklyn, NY, highlighted the impact of these difficulties on small businesses. “The holiday shopping season is a critical time for any retailer, but unfortunately, small businesses are not seeing the kind of increase in consumer spending that will give us a big sales boost to close out the year,” Denis said. She added that not only are their businesses’ bottom lines hurting, but their personal holiday spending budgets are also taking a hit.
When asked about the reasons behind the sales slowdown, two-thirds of small business owners mentioned consumers having less disposable income and a tougher economy in 2023. Thirty-two percent attributed the slowdown to an inability to compete with discounts offered by larger companies, and 31% pointed to the rise of online shopping as a factor making consumers harder to reach.
The potential outcomes of slowing sales and diminished margins are all challenging: 22% of small business owners said they would have to delay reinvestment in their business, 21% would have to lay off workers or curtail hiring plans, 13% would need to seek a loan or line of credit to make up the difference, and 12% said they would have to take a personal pay cut.
The survey, conducted between December 1 and 8, 2023, collected responses from 337 retail small business owners. As we head into 2024, it is clear that the challenges facing small businesses remain significant, with the economic climate continuing to impact not just their operations but also their personal lives.
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