In Thumbtack’s 11th Annual Small Business Friendliness Survey, small business owners shared concerns about a slowing economy, delayed retirement and an overall cautious approach to what the future might hold.
In the survey, each small business owner was asked to rate the support and friendliness of SMEs from the state government. The highest-ranked state this year was Delaware with an A+, followed by Idaho with a B+ and Arkansas with a B-. There were 21 states that received an “F” grade from small businesses, including Arizona, California, Connecticut, Illinois, Indiana, Kentucky, Louisiana, Massachusetts, Maryland, Minnesota, Missouri, North Carolina, Nebraska, New Jersey, New York, Oregon, Pennsylvania, Tennessee, Texas, Washington and Wisconsin.
“Due to declining government support from the pandemic and uncertain economic conditions, more states than ever received fail grades in 2022,” said David Steckel, senior director of Strategic Partnerships and New Ventures at Thumbtack. “We found that it can take around six months for consumer behavior and general changes in the economy to trickle down to small businesses, and service workers are often the last to feel the impact.”
According to the survey results, almost half (49 percent) of all service professionals expect business conditions to deteriorate in the next three months. At 61 percent, this fear was particularly widespread among Generation Z small business owners. When asked, respondents said these fears stem from concerns that work will slow down in the event of a recession (31 percent) and “not being able to support themselves” (34 percent).
Another generational difference was found in the motive for starting a small business and in the perception surrounding the business. Gen Z and Millennials both value personal autonomy, and when asked what motivated them to start their own small business, Gen Z (82 percent) and Millennials (64 percent) cited the top reason for small business owners as the “ability to start my own to be boss”. “Schedule flexibility” also comes second for both generations.
It has also been found that Gen Z small business owners have a better gender balance and are less likely to view federal and state governments as supportive. It’s also more likely that they’ve raised prices over the past year.
“As a tech-first generation, Gen Z business owners are more flexible and are likely to pass the cost on to consumers once they see an impact on their business,” said Steckel. “Over a third (35 percent) of Gen Z business owners have increased prices due to increases in material and consumable costs, compared to 26 percent of Gen X and 28 percent of Baby Boomer small business owners.”
In the consumer portion of the survey, respondents indicated that overall they still want to spend at SMBs in their local communities, with 80 percent of Americans saying they give at least some thought to using small, local businesses in their day-to-day spending. While “supporting the local economy/my neighbors” was the top reason for supporting local small businesses over national chains (62 percent), Gen Z (26 percent) and Millennials (27 percent) were the most likely generations to have “political or ethical agreements” as the reason List why they could support a local small business.
“While current conditions are making small business owners of all ages concerned about the future, the strong consumer sentiment we’ve seen regarding continued support for small businesses offers a silver lining as consumers prioritize supporting their local economies, especially ahead of the holiday season,” said Steckel.