Small businesses from Md. can handle the challenge

Small business owners in Maryland and across the country are reporting inflation, and supply chain disruptions are having a big impact on their business. Small businesses play an important role in our national economy, with small businesses accounting for more than 99 percent of all Maryland businesses and nearly half of all Maryland employees employed in one, according to the US Small Business Association.

According to a new study by Bank of America, small business owners face market and operational challenges, such as inflation, supply chain problems and labor shortages.

Despite these difficulties, business confidence remains strong, with 64% of small business owners expecting their revenues to increase over the next 12 months. In addition, business owners continue to recover from the pandemic, with more than three in five business owners (62%) believing that their business has fully or partially recovered. Nearly half (48%) say increased consumer spending has been crucial to rebuilding their business.

Concerns and challenges

Business owners are increasingly concerned about the impact of inflation, the supply chain and labor shortages, and these factors are driving them to make operational changes.

Eighty-eight percent of business owners say inflation is affecting their business, driving them to raise prices, re-evaluate cash flow and spending for the coming year, lose sales, reduce business costs and increase employees’ salaries.

Not far behind fears of inflation, with 76% of business owners saying supply chain problems also affect their business, forcing them to raise prices, struggle to supply products and supplies and slow down the supply of goods and services.

In addition, 41% of business owners say that labor shortages are affecting their businesses, forcing them to work longer hours due to staff shortages, struggling to fill jobs, reducing the products and services they offer, to raise wages and lose customers.

How to answer

Although the market is difficult, small business owners can take action to mitigate these looming economic challenges. For example, business owners may increase prices according to specific supply problems – instead of raising prices everywhere – to avoid disappointing customers, while taking into account the impact of inflation and delays in supply.

Knowing that supply chain disruptions are likely to continue, entrepreneurs need to review their networks and consider expanding to include multiple suppliers. Offering tools such as loyalty programs, fair delivery estimates and affordable helplines are also key to stand out from the competition and keep customers happy.

As the shortage of talent continues, business owners need to focus on retaining employees. Offering competitive wages is key, and other incentives such as flexible working hours can go a long way to keeping employees happy.

Looking to the future, business owners believe that new technologies will be crucial to reducing risk and success. Many business owners have already started aggressively implementing new technologies – in the last 12 months, 70% of business owners have adopted new digital tools and strategies, including adopting more forms of cashless payments and banking more through online and mobile applications.

In the long run, 44% of business owners plan to prioritize digital sales over brick and mortar, and many believe that cybersecurity and automation will be crucial to success.

Chi Eze is vice president, manager of a small business banker, Bank of America, Greater Maryland.

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