The current economic conditions in America are posing a significant threat to small businesses, with nearly half of them believing that they won’t survive, according to a recent survey conducted by RedBalloon and Public Square. Out of the 80,000 small businesses surveyed, 48.6 percent expressed concerns about their survival. The survey also revealed that 22.4 percent believed their businesses would “definitely not” survive continued inflation, while 26.2 percent felt that their businesses would “probably” not make it.
The impact of COVID-19 lockdowns in 2020 was devastating for small businesses, particularly those that couldn’t compete with giants like Amazon. Andrew Crapuchettes, founder and CEO of RedBallon, stated that the combination of rampant inflation, higher taxes, and a tight labor market has made it even more challenging for businesses to survive.
One of the most concerning statistics from the survey is that 80 percent of small-business owners reported an increase in supplier prices over the past 30 days. This marks the eighth consecutive month of supplier price hikes. In addition, four in 10 small-business owners have had to delay bill payments this year to manage cash flow. More than six in 10 now believe that the U.S. economy is headed towards stagflation, where prices rise while the economy fails to grow or even slips into recession.
Vera Balic and her husband Chris Jordan, owners of Houston Fast Track in Texas, have been facing numerous challenges in keeping their family entertainment business afloat. One of their major concerns is finding quality employees. They struggle to compete with larger companies like Amazon or other warehouses that can offer higher wages. Many of their employees already have second jobs, and with the increasing cost of living, they are finding it difficult to make ends meet.
The couple’s rent has increased significantly over the years, from just $900 a month 32 years ago to $9,045 a month today. They also have to deal with the added expenses of maintaining their games and equipment. Despite steady business, revenue has dropped by 13 percent compared to the previous year.
Many businesses, including major retailers like Red Lobster, Cracker Barrel, TGI Fridays, and Best Buy, have been forced to close several of their locations due to rising costs and unsteady revenue. Critics often blame “corporate greed” for inflation, but Ms. Balic argues that small businesses have no choice but to raise prices to cover the rising costs of rent, shipping, utilities, and taxes.
Allan Garfinkle, president of Crestmont Capital, expresses concern for the way small-business owners are being treated. He blames excessive regulations, favoritism towards big business, and the skyrocketing cost of fuel for the difficulties faced by small businesses. He cites a recent California law that requires companies hiring independent contractors to reclassify them as employees, which could eliminate the flexibility for these workers and potentially raise prices for consumers.
Mr. Garfinkle also questions another California law that mandates a minimum wage of $20 per hour for fast-food employees. He believes this will make affordable food more expensive and discourage people from dining out. He fears that if the political climate remains the same, there may be no place for small businesses in the future.
In conclusion, small businesses in America are struggling to survive under the current economic conditions. The combination of COVID-19 lockdowns, rampant inflation, higher taxes, and a tight labor market has created significant challenges. Rising supplier prices and delayed bill payments have added to the burden. Small-business owners are finding it difficult to compete with larger companies for quality employees, and increasing costs are forcing them to raise prices. Concerns about the future of small businesses are growing, with some major retailers already closing multiple locations. The fate of small businesses rests on the ability to navigate these challenges and adapt to an uncertain economic landscape.
