Just when it seemed impossible for things to get tougher for small businesses, the federal government decided to make things worse.
Small businesses have had a tough run for the last few years. Record inflation, high interest rates, and workforce shortages have led to widespread pessimism among small businesses. The last thing they need is more government interference, but that is exactly what is happening.
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Small businesses are feeling the effects of the Federal Reserve’s interest rate hikes as tightening credit puts more businesses and workers in dangerous positions, according to The New York Times.
Interest payments for small businesses will rise to about 7 percent of revenues next year on average, as opposed to being just 5.8 percent of revenues in 2021, according to the NYT. The Fed has raised its federal funds rate to a range of 5.25 percent and 5.50 percent following a series of 11 hikes that started in March 2022, bringing the rate to its highest point in 22 years.
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Small business optimism remains near record lows, as small business owners believe that inflation, supply chain problems and tax increases pose serious threats to small businesses, according to a Friday poll by the Job Creator’s Network Foundation (JCNF).
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Nearly half of American small business owners say they are at risk of closing down this fall, according to new survey data.
The small business network Alignable released the survey, which found that “47% of small business owners … say their businesses are at risk of closing by fall 2022, unless economic conditions improve significantly.”
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Recent images from the Los Angeles railyards of a sea of cardboard wreckage, the remnants of thousands of stolen packages, have made national headlines. Union Pacific railroad said criminal rail theft in LA has increased by more than 2.5 times since December 2020. Yet while most media coverage focuses on this third-world scene, little has been made of the consequences for the small business sellers ripped off by this grand theft.
Whether it comes in the form of widescale package theft by criminal enterprises or organized smash-and-grab robberies at brick and mortar stores, theft has become a big problem for small businesses. A new survey finds that nearly all small business owners experienced an increase in theft in 2021.
This isn’t the shoplifting of your parent’s generation. Elaborate criminal networks steal and resell goods at below-market rates on internet marketplaces such as Amazon, Facebook, eBay, and Alibaba. The cost of lost inventory and ensuing cut-rate online competition puts tremendous pressure on small business margins that are already strained by the highest inflation in 40 years and severe supply chain disruptions.
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