In Thumbtack’s 11th annual Small Business Friendliness Survey, small business owners shared concerns about a declining economy, delayed retirement and an overall cautious approach to what the future may bring.
In the survey, each small business owner was asked to rate state government levels on the support, and friendliness, given to SMBs. The highest-ranking state this year was Delaware receiving 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 waning government support from the pandemic and uncertain economic conditions, more states received a failing grade in 2022 than ever before,” said David Steckel, senior director of strategic partnerships and new ventures at Thumbtack. “We’ve found that consumer behavior and general shifts in the economy can take about six months to trickle down to small businesses, and service professionals are often the last to feel the impact.”
According to the survey findings, nearly half (49 percent) of all service professionals are anticipating business conditions worsening in the next three months. This fear was found especially prevalent among Gen Z small business owners at 61 percent. When prompted, the survey respondents said these fears are based on concerns for “work slowing down” in the case of a recession (31 percent) and “not being able to support themselves” (34 percent).
An additional generational divide was found in the motive for starting a small business as well as perceptions around 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) small business owners’ top reason was the “ability to be my own boss” with “schedule flexibility” coming in at a close second for both generations as well.
Gen Z small business owners were also found to have better gender balance, and less likelihood of considering the federal and state governments to be supportive. They are also more likely to have increased prices over the past year.
“Being a tech-first generation, Gen Z business owners are more nimble and likely to pass on costs to consumers as soon as they see an impact on their business,” Steckel said. “Over a third (35 percent) of Gen Z business owners increased prices due to the rise in the cost of materials and supplies, as compared to 26 percent of Gen X and 28 percent of Baby Boomer small business owners.”
In the consumer portion of the survey, respondents provided that overall, they still want to spend with SMBs in their local communities, with 80 percent of Americans reporting they give at least some consideration to using small, local businesses in their day-to-day spending. At the same time, 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 site “political or ethical agreement” as a reason they might support a local small business.
“While the current conditions are leaving small business owners of every age worried about what the future holds, the strong consumer sentiment we’ve seen around continuing to support small businesses provides a silver lining as consumers prioritize supporting their local economies, particularly ahead of the holiday season,” Steckel said.