How Small Businesses Can Navigate Economic Uncertainty

Amid an uncertain economy,  the proliferation of organized retail crime, and an ongoing workforce shortage, small businesses in the U.S. are facing a multitude of challenges impacting their operations.

On the second day of CO—'s 2022 Start. Run. Grow. Week, Neil Bradley, Executive Vice President, Chief Policy Officer, and Head of Strategic Advocacy at the U.S. Chamber of Commerce, discussed the current state of small business, as well as how entrepreneurs can best position their companies to thrive.

In an Uncertain Economy, Small Business Owners Must Consider Long-Term Ramifications

Inflation has had a significant impact on small businesses: the most recent MetLife U.S. Chamber Small Business Index found that 70% of small businesses have raised their prices due to inflation, while 40% have taken out loans to bridge the cash flow gap. Though inflation and rising prices are typically associated with a recession, other economic indicators remain strong.

“Traditionally, when you’re in a recession, you see employers pulling back on hiring … [and] investment, and you see consumers pulling back,” according to Bradley. “We’re kind of maintaining at elevated levels — we’ve come down off a peak, but we are not heading down into negative territory.”

Regardless of whether the economy enters a recession, Bradley urges small business owners to consider long-term ramifications when making financial decisions.

“If you’re taking out loans to be able to manage cash flow ... [because of] the higher prices that you’re paying today and [delayed payments] from your consumers, how much increased debt are you taking on?” he posited. “You have to be really careful about where you end up if we are in a recession, and what you’re going to have the wherewithal to manage through.”

Organized Retail Crime Impacts Small Businesses and Requires Legal Action

Another rising challenge for businesses of all sizes is organized retail crime. However, it can be especially damaging for small businesses, which could suffer more financially from a major hit.

“This is not the shoplifting of old,” stressed Bradley. “This is highly organized theft, and it’s taking advantage of changes in the law and people figuring out how they can avoid accountability.”

Because the dollar amount for prosecution has increased and there is no aggregation for multiple offenses, organized retail crime networks can coordinate multiple attacks, Bradley elaborated. And since online marketplaces do not require sellers to provide basic information, criminals can continue to sell stolen goods to unknowing shoppers.

“We’ve called forth the U.S. Chamber to apply the basic principle [of providing basic information] to online sellers,” he added. “States [also] need to get rid of the [aggregation] loopholes, and then ultimately, prosecutors have to prosecute these crimes.”

During the Workforce Shortage, Small Businesses Maintain a Competitive Advantage

For small businesses looking to scale their operations, the workforce shortage remains front of mind. From parents lacking affordable childcare to workers opting for early retirement to entrepreneurs starting their own businesses, there are fewer people seeking employment now than before the pandemic.

Small business owners may worry about how to attract top talent when competing with larger companies, many of which have significant resources at their disposal. However, according to Bradley, small businesses don’t need fancy perks if they lean into their own natural advantage.

“Small businesses have a tremendous competitive advantage because of [their] ability to really know … the people who work for [them], and how [to] help [employees achieve] balance,” he explained. 

He also added that small businesses can help connect their employees with other third-party resources, such as childcare options, to attract and retain top talent.

“You know what your employees need — and [often] someone else has started a small business somewhere that helps meets that need,” said Bradley. “Part of it’s just connecting your business with theirs and providing those benefits.”