Owning or starting a small business can be difficult even in the best of financial times. Yet, amid the economic uncertainty of the past few years, small business owners are embracing even more as the country continues to recover from the effects of the global pandemic that has affected businesses of all types and sizes. are facing the challenge of Despite these challenges, there are also market conditions where savvy business owners can find opportunities for success.
Workforce issues are a hurdle to overcome in 2023 and likely to continue. The pandemic has sparked what has come to be known as the Great Resignation, with many workers willingly quitting one job to try another, sometimes in quick succession. — for better rewards or terms. That means more costs to acquire and retain labor. If you are lucky enough to find quality talent, you will have to pay more than you paid in 2019. In fact, analysis shows wage growth has averaged 6.2% since 1960, but will hit an all-time high of 14.8% in April 2021, according to the U.S. Bureau of Economic Affairs.
The pandemic has also wreaked havoc on supply chains around the world, pushing up the cost of goods.The Bureau of Labor Statistics recently reported that consumer prices rose 9.1% in the year to June 2022. . This is his biggest rise in 40 years. These increases will continue to squeeze small business owners’ margins, making it more difficult to turn a profit.
Rising interest rates are also impacting small business owners. Higher interest rates can increase borrowing costs and reduce consumers’ discretionary purchasing power. Small business owners are finding themselves paying more for people and products while sales are declining due to a lack of demand from cost-conscious customers. Many of them are belting out to focus more on essentials like food, housing, and more. And drugs, they’ve all gone up in price lately.
But despite many economists predicting a 2023 recession in the US, there are some bright spots for small business owners.
One of the bright spots for businesses in Northwest Arkansas is the region’s continued growth.
At a macro level, many employers held the notion that before the pandemic hit, staff weren’t productive if they weren’t in the office. Employers who have been forced to work from home have found their workers to be as or even more effective than working from home, and have found additional benefits from being able to reduce facility costs. Companies looking to hire today can expand their talent pool by offering telecommuting or hybrid options.
Another bright spot in the economy is that consumers are increasingly interested in local, quality products. With demand for more local options such as craft beers, local coffee, and chef-influenced restaurants with locally sourced ingredients, there’s plenty of room for entrepreneurship.
One of the lesser-mentioned keys to small business success is the business owner’s team of trusted advisors, including relationships with local banks. Any bank can offer savings accounts and loans, but having a financial partner that invests in your local community means you have the potential to have bankers who have a deep understanding of the challenges small businesses face in that particular community. is higher.
Bankers should strive to know their customers’ businesses as well as their owners so that they can quickly identify problems and reach the best lawyers when they arise. This includes connecting with other small business owners and resources, such as accountants, attorneys, real estate professionals, and the Arkansas Small Business and Technology Development Center at the University of Arkansas.
Business owners can learn and grow their business, including seminars related to cash flow management, fraud awareness, 401k/employer benefits, business succession, and other hot topics that may affect their business. You should look for a financial partner who offers you the opportunity to This is another area where Northwest Arkansas has an advantage over other markets. Nine of NWA’s top 10 deposit market share banks are rooted in the region.
Kelly Carlson is vice president and commercial banker at Arvest Bank in Bentonville. Opinions expressed are those of the author.