4 challenges small businesses are taking on with renewed optimism

No matter the size of your business, it’s worth taking note of the strategic moves that small businesses have made to adapt, innovate and survive since the pandemic, and considering if they’re also right for you.

A recent survey by Truist of 522 business owners with annual revenue ranging from $100,000 to $2 million indicates they’re using what they’ve learned from all the unpredictability to build a more resilient business that’s ready to not only respond to challenges, but seize opportunities.

A majority are confident in the sustainability of the business (69%) and in their local economy (59%), despite having reservations about the U.S. economy (only 51% confidence). Stress levels among business owners are also falling. In 2021, 57% said they were “somewhat” to “extremely” stressed; that figure is 47% this year.

Small businesses rising to 4 major challenges

Close to two-thirds (65%) of small businesses reported running into supply chain disruptions that affected profitability, sales and customer retention. Here’s what they’re doing about it:

• Finding new supply sources (48%)
• Using local suppliers (45%)
• Adjusting delivery schedules (37%)
• Streamlining product lines (31%), and
• Changing the product mix (30%).

The workforce has dramatically changed for small businesses. Since 2020, there’s been a noticeable increase in unfilled jobs, departing key workers, distributing work between contractors and employees, using automation and/or replacing workers with an outsourced service.

As a result, most businesses (81%) took action to retain and recruit employees in a tight labor market:

• 41% increased wages
• 27% offered a remote work option
• 22% provided training for career advancement
• 21% provided additional paid time off
• 21% started offering referral bonuses
• 21% began paying hiring bonuses, and
• 20% started offering an employee health and wellness program.

Supply and labor shortages have contributed to rising costs and inflation. To protect profitability, or to take advantage of a market where rising prices are anticipated, 90% of small business owners changed the cost structure of their products by:

• accepting lower profitability (39%)
• changing purchasing decisions to reduce expenses (36%)
• re-evaluating their pricing vs. the market or their competition (35%)
• passing along price increases to customers (33%), and/or
• changing products or services to make them less expensive (26%).

Survey respondents reported that cash shortfalls are less frequent than they were last year, but are still higher than they were pre-pandemic. When faced with cash shortfalls, small business owners have turned to:

• business cash reserves (33%)
• a business line of credit (33%)
• cash infusion by the owner (29%)
• a personal loan taken out by the owner (26%)
• tightening up on A/R (22%), and/or
• stopping paying themselves a salary (21%).