Md. small businesses can rise to the challenge
Small business owners in Maryland and across the country are reporting inflation and supply chain disruptions are impacting their businesses in big ways. Small businesses play an important role in our national economy, with small businesses making up more than 99% of all of Maryland businesses, and nearly half of all of Maryland’s employees being employed at one, according to the U.S. Small Business Association.
According to new research from Bank of America, small business owners are facing market-driven and operational challenges, like inflation, supply chain issues and labor shortages.
Despite these difficulties, business confidence remains strong, with 64% of small business owners anticipating their revenue will increase over the next 12 months. In addition, business owners are continuing to recover from the pandemic, with more than three-in-five business owners (62%) feeling their business has fully or partially recovered. Nearly half (48%) cited increased consumer spending has been critical to their business’ recovery.
Concerns and challenges
Business owners are increasingly concerned about the impact of inflation, supply chain, and labor shortages, and these factors are leading them to make operational changes.
Eighty-eight percent of business owners say inflation is impacting their business, causing them to raise prices, reevaluate cash flow and spending for the year ahead, lose sales, reduce business costs, and increase employee wages.
Not far behind inflation concerns, with 76% of business owners saying supply chain issues are also impacting their business, causing them to raise prices, struggle sourcing products and supplies, and delay delivery of goods and services.
Additionally, 41% of business owners say labor shortages are impacting their business, causing them to work more hours due to staff shortages, struggle to fill job openings, reduce the products and services they offer, raise wages, and lose customers.
How to respond
Though the market is difficult, small business owners can take action to mitigate these looming economic challenges. For example, business owners can increase prices relative to specific supply issues — rather than raising prices across the board — to avoid frustrating customers while still accounting for the impact of inflation and supply delays.
Knowing supply chain disruptions are likely to persist, entrepreneurs should review their networks and consider expanding to include multiple suppliers. Offering tools like loyalty programs, honest shipping estimates and accessible help lines are also key to standing out from competitors and keeping customers happy.
As talent shortages continue, business owners should focus on employee retainment. Offering competitive salaries is key, and other incentives like flexible hours can go a long way to keeping employees satisfied.
Looking to the future, business owners believe new technologies will be critical to risk reduction and success. Many business owners have already begun aggressively incorporating new technologies — over the past 12 months, 70% of business owners have adopted new digital tools and strategies, including accepting more forms of cashless payments and banking more via online and mobile apps.
Longer-term, 44% of business owners plan to prioritize digital sales over brick and mortar, and many believe that cybersecurity and automation will be critical to success.
Chi Eze is vice president small business banker manager, Bank of America, Greater Maryland.