Small Business Reopening Outlook

Small Business Reopening Outlook

With Covid subsiding and life returning to normal, the small business sector is slowly but surely reopening and beginning to once again thrive. While there is optimism surrounding reopening endeavors, large gatherings, full capacities, and complete service offerings, the next six to twelve months present no shortage of challenges. From business model restructuring to hiring to inflation, small business leaders have plenty to navigate in the short-term in order to succeed in the long-term. 

A previous post detailed already many facts and figures about the small business hiring struggle, but the practical implications are what hit home the hardest. As small businesses work to rebuild workforces, it has caused small business leaders to get creative with service offerings, operating hours, and business practices. For long-term success, finding balance for at least the rest of 2021 is going to be key. Whether it’s scaled-back menus, certain days with closed lobbies or shorter hours, or a temporary redirect to online processing, adapting while hiring is a must.

Inflation is also a hot-button topic and a primary driving force behind economic reshaping. While optimism has trended higher during the first half of 2021, small businesses are not staring down a major obstacle toward stability. The price of goods and services is spiking up and down the supply chain. Owners front these costs, but customers and end-users pay the price. According to finance-commerce.com, costs of construction materials, for example, have increased 4% from April to May and nearly 20% from the same time a year ago. These costs initially hit manufacturers, and trickle down the supply chain to the average consumer. This, of course, is exacerbated by increased costs in freight and fuel, which impact virtually all components

Inflation does not discriminate; it impacts businesses of all sizes, but major business can use their bulk buying leverage to negotiate better pricing. What is lost on the front end to these corporate negotiations is made up for by hitting small business–the sector with no leverage–the hardest. Passing the cost on to consumers is also the most difficult for small businesses because of their personalized nature. It’s much easier to ask an anonymous consumer to pay a little more; asking neighbors with whom there is first-name relationship to accept higher prices is far more difficult. 

In Lexington, to help mitigate such challenges and stem losses, the LFUCG has approved a second round of funds for the Small Business Economic Recovery Program, which comes on the heels of 2020’s similar stimulus program. Commerce Lexington is managing the program this time, and has a wealth of information on contact information, specific benefits, and eligibility requirements. To support local small businesses, the program is offering a $25,000 grant to eligible applicants. This time, the funds will target payroll and other talent acquisition expenses as small business work to rebuild their workforces, maximize operations, and fully return to normal. Applications are being accepted until July 16.