With two-thirds of 2022 behind us, the challenges facing small and medium-sized businesses (SMBs) are mounting. 

With continuing pressure on revenue and cash reserves, upheaval in the labour market and disruption to supply chains, it's clear that there are tough times ahead, and SMBs -the bedrock of most countries' economies -are in the firing line. But many business managers have a new-found understanding of technology which may help them find a way to succeed even in difficult times. In this special feature we look at both the broader economic picture and how small business is using tech to respond.

Macroeconomic trends

In December 2021, the OECD noted that "Output in most OECD countries has now surpassed its late-2019 level and is converging on its pre-pandemic path but lower-income economies, particularly those where vaccination rates are low, are at risk of being left behind". 

Inflation, which was predicted to peak in late 2021, was expected to be 2.47% higher worldwide over the year beginning 24 February 2022 due to commodity and financial market shocks caused by Russia's invasion of Ukraine. The worldwide hit to GDP over the same period was predicted to be 1.08%.  

In June 2022, the OECD assessed 'The price of war' by noting that, prior to the outbreak of the war, the outlook appeared broadly favourable over 2022-23, with growth and inflation returning to normality as the COVID-19 pandemic and supply-side constraints waned. "The invasion of Ukraine, along with shutdowns in major cities and ports in China due to the zero-COVID policy, has generated a new set of adverse shocks. Global GDP growth is now projected to slow sharply this year to 3%, around 1? percentage points weaker than projected in the December 2021 OECD Economic Outlook, and to remain at a similar subdued pace in 2023," it warned. 

The latest figures for the UK economy are in line with these predictions, with GDP growing by just 0.2% in July after falling by 0.6% in June and the Consumer Prices Index including owner occupiers' housing costs (CPIH) rising by 8.8% in the 12 months to July 2022, up from 8.2% in June. The Consumer Prices Index (CPI) rose by 10.1% in the 12 months to July 2022, up from 9.4% in June.

When it comes to the prices that producers of goods and services pay for their inputs and charge for their outputs, the trend is also rising sharply. The latest ONS figures show input prices up 22% on the year to July 2022 (down from a record high of 24.1% in the year to June 2022) and output (factory gate) prices up 17.1% over the same period (up from 16.4% in the year to June 2022, and the highest level since August 1977). A particular issue for small businesses is the increases they are facing in their energy costs -for electricity and gas. While the government has taken some steps to tackle this the Federation of Small Business has noted that "a tough year remains ahead of many small firms".

Small business health and confidence  

How are these macroeconomic trends playing out among small businesses? 

In the US, the health of SMBs (defined as companies with fewer than 500 employees that are not sole proprietorships) is tracked on a quarterly basis by the US Chamber of Commerce/Met Life Small Business Index (SBI). The latest Q2 2022 SBI score, based on a survey conducted between April 29 and May 17, was 66.8 -- the highest level since the start of the pandemic, although still below the Q1 2020 level (71.7):

Although there's no sign of collapsing confidence in the SBI just yet, there are warning signs in the trends for the five biggest challenges facing US small businesses. 'Inflation costs' is rising sharply, 'supply chain issues' is rising steadily, while a downward trend for revenue as a concern has reversed in Q2. Rising interest rates have also entered the picture as a major concern for small businesses in the US:

Meanwhile, half of SBI respondents say they believe it will be another six months to a year until the US small business climate returns to normal, while fewer than one in ten (6%) think that normality has already resumed.

Another regular UK survey is carried out by the Federation of Small Businesses (FSB), which is used to generate the UK's Small Business Index (SBI). In Q2 2022, the SBI fell to