While small businesses feel uncertain about the future, consumer desire to support small businesses remains strong. Insights from more than 1,000 consumers in a gen-pop survey found that over one-third (37 percent) of Americans are directing more spending toward small businesses now as compared to last year and the average consumer is willing to pay a 10 percent price increase to support a small business over a national retailer. Supporting small businesses remains top of mind for consumers, with 80 percent of Americans giving at least some consideration to using small, local businesses in their day-to-day spending and of that 80 percent, roughly 50 percent say it is their primary consideration or a strong consideration.
“Current economic conditions and waning government support from the pandemic are leaving small businesses feeling worried about what the future holds,” said Marco Zappacosta, Co-Founder and CEO of Thumbtack. “As inflation continues to impact a majority of industries, it’s crucial that government organizations, at all levels, band together to support small businesses.”
“Business has been good over the last year, and being based in Delaware has given us the opportunity to grow as a company.” said Daniel Turcios, Thumbtack pro and owner of Prime Painting and Drywall. “There’s lots of opportunity and support here for small businesses like ours, and with the increased demand we’ve seen over the past year, we are hoping to expand our company at the end of this year.”
State, federal and city rankings
Small business owners rated government small business friendliness at the city, state and federal level, with an overall decline in grades across the board compared to previous years. The federal government received an “F” grade this year, a decline from last year’s “C+,” indicative of the overall downturn in sentiment among small businesses.
This year, the majority of states received below-average grades. Delaware received the highest grade of an “A+”, and marked the only state to receive an A rating, followed by Idaho with a “B+” and Arkansas with a “B-”. Florida and Mississippi received “C+” grades; Hawaii, Maine, and Oklahoma received “C” grades; and Colorado, New Mexico, Rhode Island, South Carolina, and Utah received “C-” grades from local service professionals. The number of states that received an “F” ranking quadrupled this year, with fourteen states receiving the lowest grade.
City findings mirror state results, with 70 percent of areas receiving failing grades. Only three cities received above average ratings this year: Boise, ID (“A-”), Orlando, FL (“B+”), and Providence, RI (“B”). Out of 20 cities, eight received an “F”, including Chicago, IL; New Orleans, LA; New York, NY; Oakland, CA; Phoenix, AZ; Portland, OR; San Francisco, CA; and Washington, DC.
Economic uncertainty fuels investment woes
When asked about concerns around a looming recession, small business owners cited work slowing down (37 percent), as their greatest concern, followed by a fear of not being able to support themselves (34 percent). With continued economic uncertainty, small businesses are having to take action to stay afloat. 72 percent of small businesses are charging higher prices than a year ago. This results from higher prices on materials and supplies and energy/gas.
Current economic conditions are also impacting how small business owners are thinking about the future of their businesses, both from a retirement and potential expansion perspective. A majority (64 percent) of small business owners looking into retirement options have delayed their retirement due to financial concerns. An additional 20 percent want to retire but don’t have someone they can sell or leave their business to.
On the other hand, almost two-thirds (61 percent) of respondents stated that they are interested in expanding their business. 29 percent plan to do so within the next year, while 15 percent say they’re waiting until economic conditions improve.
While there’s a clear desire to invest in their businesses, hiring has remained a pain point for small business owners over the past year. 69 percent of respondents have faced at least one hiring obstacle in the past year and more than half of respondents who hired employees in the past year (52 percent) said it was difficult to do so.
Looking for government intervention
Only 25 percent of small business owners consider the federal government to be supportive of skilled professionals like them, increasing slightly to 30 percent for state government, and 32 percent for local government, showing there’s room for improvement. According to small businesses, the top ways that governments can support local professionals include:
- At a federal level: Lowered (48 percent) and simplified (46 percent) taxes.
- At a state level: Reduced and streamlined regulatory and licensing requirements (49 percent) and expanded access to/improved training and educational programs (43 percent).
- At a local level: Investments in local transportation and infrastructure (43 percent) and expanded access to training programs or improved training and educational programs (43 percent).
In the survey, now in its 11th year, 43 states received grades ranging from “A+” to “F” on overall small business friendliness as well as regulations, taxes, training opportunities, and more. For the complete results, please visit our survey page or check out our blog.
2022 Small Business Friendliness Survey Methodology
In a survey of Thumbtack professionals within home maintenance, home construction, and the home systems industries (34 percent) as well as in events, education, health and wellness, pets, and business services, over 2,800 responses were collected nationwide from August 3, 2022 to September 22, 2022 with a margin of error of +/- 2 percent. A sufficient sample size was collected to grade 43 states and 20 metropolitan areas. The eight graded metrics evaluate overall government support, ease of starting a business, ease of hiring employees, labor regulation, tax regulation, licensing regulation, and training and networking programs availability and helpfulness. Thumbtack’s Small Business Friendliness Survey represents the largest continuous study in the U.S. of small business perceptions in the local services industry on government policy.
2022 Consumer ‘Gen-pop’ Survey Methodology
This sample of 1,000 U.S. adults (aged 18-65) was surveyed on September 27 and 28, 2022. Sampling was weighted to obtain gender and generational representativeness, aligned with U.S. census demographics. DKC Analytics conducted and analyzed this survey with a sample procured using the Pollfish survey delivery platform, which delivers online surveys globally through mobile apps and the mobile web along with the desktop web. No post-stratification has been applied to the results.
About Thumbtack
Thumbtack is a technology leader building the modern home management platform. Through the Thumbtack app, homeowners can effortlessly manage their homes — confidently knowing what to do, when to do it, and who to hire. Bringing the $600 billion home services industry online, Thumbtack empowers millions of homeowners to fix, maintain, and improve their most valuable asset. Hundreds of thousands of local service professionals, from painters and plumbers to photographers and more, use the Thumbtack platform to grow their businesses each year. The company is backed by Sequoia Capital, Tiger Global Management, Javelin Venture Partners, Baillie Gifford, and CapitalG, among others.
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