According to the Small Business Association, the US has nearly 32 million small businesses employing 61 million people.  We saw how vulnerable they were in 2020 with the covid pandemic, and we wanted to provide a list of the four biggest challenges that small businesses face so that they can be addressed before they become a serious problem. 

Economy

While the economy does comprise several attributes, after many years with a booming economy, we are looking at a slow down.  The Fed is trying to curb inflation by raising rates, and it has said that it will increase them by up to a half-point each time so that inflation will be in check, but raising rates will reduce borrowing and may slow the economy.  The best thing that you can do when an economy is headed south is to tighten up your finances, reduce your costs where possible, and only spend on the things that are profit drivers while you weather the storm.

Labor

Small businesses should concern themselves with attracting and keeping loyal talent, even with limited resources.  With the Covid pandemic, the unemployment rate did go up, but many employees chose not to go back to work after rehiring started.  All employers need to be mindful of workplace mental wellbeing—the elevated employee stress levels from multitasking results in reduced focus, loyalty, and productivity.

Supply chains

Large and small businesses will need to overcome continued supply chain issues in 2022.  Plan on late deliveries and allow for an extended time when quoting to customers.  Try to create multiple sources where possible, or order more than needed and pay for higher storage fees; this may cost more now but save a long-term customer relationship.  If there is an issue, inform your customers as soon as you are aware of the problem so that they can plan accordingly.   You want to preserve your relationships, and if they know your issues, then they will have more time to plan accordingly.  Supply chain issues will also lead to more inflation so expect this and account for it in your pricing sooner rather than having to make a significant increase all at once. 

Financing

Businesses that are looking for capital are probably going to have a harder time doing so.  One of the essential things that you can do to improve your small business’s chances of obtaining funding is to show a strong history of sales.  Our merchant services can help you in two specific ways.  We have software to monitor all of your credit card sales.  This can provide a strong history of auditable ongoing sales, making you look good to creditors.  Second, having a good merchant processor will allow you to get the best rates on your merchant services.  Don’t pay more than you have to.  Fees eat away at your bottom line.  Use financing strategically to grow and cover cash flow shortages, but be very careful.

Summary

2022 will likely continue to be a challenging year for everyone.  Every business needs to identify its weaknesses and where it is most vulnerable and fix those problems.  Those prepared companies will be more likely to survive through the challenges of 2022 and beyond. 

To learn how our merchant services can help you best deal with 2022’s challenges.