On June 22, 2022

Ongoing challenges for small businesses

By Kevin Theissen

The last couple of years have been challenging for everyone, including small businesses. As it seems we’ve come out of the pandemic, business owners were hoping that the worst of its economic impact would end as well. Not so fast, however, as rising interest rates and inflation now must be dealt with to stop additional financial loss – and without the likelihood of additional government stimulus.

There is worry by many business owners that inflation will lead to higher interest rates on both existing and future loans. They are also concerned about the shortage of people they can employ. The Federal Reserve recently raised rates 75 basis points and likely will be forced to increase interest rates even more. Although this rise is designed to reduce inflation, some worry it could potentially lead the economy into a recession. There is also significant concern with the current macroeconomic crisis, the unstable geopolitical situation and the lingering effects of the Covid crisis.

As everything continues to reopen, there will be a higher demand for services that weren’t available during the last two years, which means small business owners will need to expand their staff in order to keep up. However, job participation is 1.3% below what it was prior to the Covid crisis and business owners must deal with wage inflation.

The best way to handle market and economic downturns is to prepare ahead of time during growth periods and set aside cash to weather cash flow in challenging times. Aim to always have at least 12 months of cash reserves available and maintain a healthy business credit score so that you can qualify for a loan if money becomes tight. Additionally, you can analyze your fixed costs and find areas to reduce them. Before hiring new employees, know how their salaries will impact your fixed costs.

Kevin Theissen is the owner and principal of HWC Financial in Ludlow.

Do you want to submit feedback to the editor?

Send Us An Email!

Related Posts

Turning point

February 12, 2025
Each one of us has the capacity to go with the flow. To look at something, then look away. If it doesn’t concern you, then no harm, no foul. Just keep doing what you were doing. As you were. You draw your line. You blur your line. Then, sometimes, something happens that forces you to…

‘I’m Still Here’: When they come for you

February 12, 2025
Award-winning Brazillian filmmaker Walter Salles does what all great filmmakers do when tackling heavy subject matter; he drills down to focus on one family amid tumult, providing the viewer a ringside seat into life under a Brazil’s brutal military dictatorship without trying to tackle every facet of the history behind a regime which lasted from…

Backcountry lessons

February 11, 2025
We all do dumb things in our 20s, right? When you are testing the boundaries of life to see which lines are flexible and which are legit. But in your 20s, you don’t have any experience in life, and you certainly cannot imagine listening to those who went before you. You might not mean to…

The young and the restless

February 11, 2025
Many years ago, when my son was a budding teenager, I got into a heated debate with him after coming home from baseball practice. The details are foggy, but my recollection is that I was disappointed with his effort that day, so I lectured him about the benefits of focus and hard work. I’ll admit…