Q4 2021 Approaching Pre-Pandemic Levels for Small Business Activity & Your Confidence

Small businesses have faced countless challenges over the last two
years. While some have struggled more than others, and some flourished despite
or because of the pandemic, overall COVID resulted in lower sales,
decreased revenue, and the need to lay off numerous hard-working employees.

But things are looking up. Could this be the spearhead to a sustained, constant economic
recovery? Only time will tell. For now, it’s enough to enjoy the positive
numbers.

What Happened in Q4 2021?

Gauging economic activity is extremely complicated, but overall
it appears that the fourth quarter of 2021, which generally covers October,
November, and December, was a strong season for sales and small business
activity.

One of the most comprehensive stats for market activity is the U.S.
Chamber of Commerce’s Small Business Index, of “SBI.” This stat is
snapshot, delivered in a single score, based on interviews and research, that
shows the overall environment and mindset of small business owners. For the
fourth quarter of 2021, the SBI score was 63, which is the highest it’s been
since the start of the pandemic.

This shows an overall increase in confidence among small business
owners, and continues the upward trend that has been seen since the second
quarter of 2020, when the country was most gripped by the pandemic.

Not only are business owners more confident, the overall value of
their businesses are increasing. BizBuySell, an online business-for-sale
marketplace, says that the number of transactions (businesses being sold) and
their average sale prices have increased to pre-pandemic
levels.

The number of transactions, as well as the selling price,
continues to trend upwards. Small business transactions on their site were at
2,340 in the first quarter of 2019, which was the last full quarter before the
pandemic. The number of transactions dropped sharply in the second quarter of
2020 (the first full quarter after the start of the pandemic), falling to
1,481. But now it has met and surpassed the pre-pandemic levels, reaching 2,364
transactions in Q4 2021.

The value of these transactions has grown as well. In Q4 2019,
the median sale price for businesses on BizBuySell was around $275,000. Now
the median price, which never really faltered, sits at $324,500 for Q4 2021.

We could go on and on with stats, but the overall trend is clear:
the environment for small businesses seems to be improving with every passing
month, and has, for many industries, surpassed the pre-pandemic levels.

How Did This Happen?

There are a variety of reasons why small businesses appear to be
in recovery. As COVID steadily declines and healthcare is better able to stop
the spread and deal with the disease, more businesses are able to open their
doors to new services. More customers are willing to dine out, more shoppers
are visiting brick-and-mortar stores, more people are visiting museums, bars,
sports events, and concerts. Simple purchases, like an ice cream cone at the
local parlor, when multiplied by billions, add up to a big recovery.

Small business owners and their teams deserve much of the credit.
They have found ways to safely offer services while maintaining a healthy, safe
environment for the staff and customers. Small business ingenuity and tenacity,
it seems, deserve much of the credit.

Will the Party Continue?

There will certainly be ups and downs, and the first quarter of
2022, or other quarters, could see declines. But there are reasons to believe
this trend will continue. Once again, we can turn to the U.S. Chamber of
Commerce, who says that small business optimism is generally high. Their Q4
2021 report says that 62% say their small business is in good
health.

Even more encouraging, 42% say they plan to increase investments,
which is up from 29% in the previous quarter. 38% plan to increase staff, a
jump from 28% in Q3.

All of these show a clear increase in confidence among business
owners, leading us to believe (with a large dose of hopeful optimism) that the
positive statistics will continue in the coming months!

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