One in Five American Small Businesses Were Closed During January, Meta Survey Shows

by Amy Myers

Data from an annual, global survey demonstrated that American small businesses saw a significant increase in closures during the month of January. Conducted by Meta, the Global State of Small Businesses report tracks information from over 23,000 business leaders in 30 countries. According to the report, many parts of the world experienced more closures due to the surge in Omicron variant cases, but the U.S. took perhaps the biggest hit.

The Big Picture

  • Global survey shows U.S. small businesses closures increased 7%
  • Women and minority-owned businesses saw even higher closure rates
  • 14 percent more of Black-owned companies saw decrease in sales since last survey
  • Small businesses also facing issues with labor

At the time that Meta conducted the global survey almost three months ago, one in five small businesses reported that they had to close their doors. This was much higher than the results from July 2021. Additionally, the U.S. saw a jump in closed small businesses from 13 percent to 21 percent. Also, our small businesses that were subject to more closures were women and minority-owned companies. Both categories saw an increase of six percent in closures. Black-owned companies, too, had bad news to share. Within this category, over half said sales were down in 2021. This was up from just 36 percent in July 2021.

Meanwhile, the Middle East and North Africa, South Asia, and Sub-Saharan Africa regions have continued to have the highest closure rates, but according to Meta, these numbers have remained stable since the last survey.

Small Businesses Are Also Still Navigating Labor Issues

As we know, Covid-related closures aren’t the only significant obstacle that small businesses have had to face recently. Since late last year, we have witnessed a dramatic change in the job market. While unemployment dropped to 3.8%, mom-and-pop shops still struggled to keep a full staff due to inflation.

“Every data point from every possible source that we have on the economy right now is indicating that we’re in an incredibly challenging hiring market,” said Laura Wronski, senior manager of research science at SurveyMonkey, told CNBC. “The unemployment rate is low but inflation is high, so wages have to be high to attract workers.”

Jennifer Park, owner of WearEver Jewelry in Alexandria, Virginia, stated that her biggest obstacle was finding loyal workers.

“It takes a lot of time to look for people. A lot of time and money to train them, do background checks, and really show them how to do this job,” Park said. “It’s just been super frustrating.”

It doesn’t help that Covid keeps many employees home as well. When schools are closed, employees have to put their parenting duties first. And, obviously, not every job is remote.

“We’re not even getting those kinds of applicants, because if they have little children, they’ve had someone to care for them or they haven’t had school to send them to,” Park continued.