Main Street Businesses Optimistic About 2022 … for Now

When we surveyed businesses two years ago about their financial health, a considerable number of them said they didn’t expect to survive.

That number peaked in November 2020 at 24% before ebbing steadily throughout 2021. In our most recent survey, 5.5% of Main Street businesses said there was a high chance they wouldn’t make it through the next two years.

But even as the threat of failure eases, the financial damage from high costs is still a very real problem for many businesses, with 45% of the merchants who say they are at a high risk of failure pointing to increasing costs as the source of their insecurity.

Thirty-one percent of the businesses we surveyed listed competition from larger businesses as their main challenge, while 28% blamed COVID-19-related issues are as root cause of their problems. Retail is the under the greatest pressure of all the segments we looked at, with 9.6% saying they are at risk of failure. PYMNTS found that 6.9% of professional services firms worried they could fail, compared to 5.6% of construction or utilities firms and 4.6% of food, entertainment and accommodations businesses.

This isn’t to say that things are all doom and gloom on Main Street. Most businesses we surveyed had a positive outlook for the coming year, although their optimism has diminished a bit over the past few months.

As recently as November 2021, 64% of these businesses said their revenues would increase in the upcoming year — up from the 45% that saw their revenue increase in 2021. The optimistic forecasts appear to be strongest in sectors that experienced the most severe shutdowns and loss of business during the worst of the COVID pandemic.

Sixty-three percent of personal and consumer services firms, and 63% of companies in the food, entertainment and accommodations segment, say sales will increase in 2022. Companies generating $1 million to $5 million in sales are most optimistic about their prospects for this year: 68% of projected their sales will increase.

Among firms bringing annual revenues of $250,000 to $1 million, 56% forecast sales increases. Fifty-three percent of firms generating $250,000 or less in revenues expect the same, as do half the firms generating $5 million to $10million in revenue, the largest revenue group sampled.

To learn more about how businesses are coping with inflation and economic uncertainty, download PYMNTS’ Main Street Economic Health Survey, done in collaboration with Melio.