It’s been a stressful few years to run a small business in America. Inflation, staffing shortages and keeping up with salary expectations continue to test business owners. It’s truly difficult to tell what’s coming next. 

Despite the volatile business environment, 90% of owners aren’t completely confident they have enough insurance coverage for their small business, according to a new survey by NEXT Insurance conducted by Wakefield Research. Survey respondents included 500 small-business owners/decision-makers in the United States, with small businesses defined as companies with 50 employees or fewer. (For more on our analysis, see “Methodology” section at the end of this article). 

The survey found that 96% of owners didn’t achieve a passing grade when quizzed about basic insurance knowledge. Nearly 30% don’t carry any small business insurance at all. 

That should give all entrepreneurs some pause. 

It’s no secret that small businesses are vulnerable to risk, but it’s clear not every owner feels confident about how to get the right protection. 

53% of small business owners said their greatest barrier to getting insurance coverage is simply knowing what kind of insurance package their business needs. 

What’s stressing out small businesses? Inflation and professional mistakes, mostly.

One issue still weighs on small businesses more than any other: inflation. 

When the cost of materials goes up, business owners have less purchasing power and have to make the tough choice between increasing prices or absorbing more expenses. 

But small businesses are also struggling as customers cut back on spending while recession concerns linger. And effects of the pandemic, like supply chain problems and hiring challenges, also haven’t disappeared.

• 68% of small business owners told us that inflation is a top stressor for their business, as high prices continue to cut into their margins. 
• 42% of owners named reduced customer spending as a primary concern.
• Almost 30% said supply chain issues remain one of their business’ biggest stressors.
• 14% of owners cited labor shortages as a top issue. 

What are the biggest risks to small businesses?

Unexpected accidents can happen to entrepreneurs in any industry — but all owners have a sense of which risks are especially dangerous to their small business.

• 51% of small business owners said making a professional mistake is one of their biggest worries.
• 39% of small business owners said an injury or illness that sidelines their employees would negatively impact their business.
• More owners are watching out for digital threats: 36% of owners said that cyberattacks and data breaches are among their primary risks. 

Location matters: Urban, suburban and rural businesses

What’s challenging businesses varies by location:

• For example, more rural small business owners (71%) are concerned about inflation than suburban small business owners (64%).
• 20% of urban small business owners are stressed over labor shortages, compared with 15% in the suburbs and just 6% in rural areas.

Are small business owners prepared for risks?

Many of the risks small businesses face fall under a term called “general liability” — referring to claims from someone else that your business has caused them harm. That could include a visitor injured at a business or a mishap costing customers money.

Claims like these are common for small businesses. Still, 96% of respondents did not get a passing grade — a C- or higher — on a knowledge quiz about general liability coverage. No respondent scored full marks. 

Even more concerning? 29% of small business owners carry no insurance coverage at all. 

Our survey found that more female business owners (35%) have no insurance coverage than male business owners (25%).

What coverage do small business owners have?

Small business insurance can come in many forms.

The small business owners we surveyed most often purchased general liability or a business owner’s policy, which is a combination of general liability and commercial property insurance.

Despite a significant risk of cyberattacks impacting their bottom line, only 10% of our surveyed businesses had cyber liability insurance coverage.