Key takeaways

  • Small business in key industries continue to be impacted by market shifts as we emerge from full pandemic lock down
  • The key to business resilience is staying financially nimble with expenses, costs and income.
  • Engage loyal customers and community support to help generate increased business
  • Consult your financial partner to ensure you’ve accessed all financial support programs you’re eligible for
  • Consider working capital financial solutions to help your business access cash faster
  • Optimize processes and embrace technology to further reduce costs without losing the value of your good or service
  • Restructure pricing to align with current market and inflation

What’s ahead for small businesses

Since 2020, at the start of the pandemic, small business owners have demonstrated their resilience with nimble business decisions and perseverance. Now in 2022, with the potential for a post-pandemic world ahead of us, small businesses must face new challenges in the market.

Industry impact of the pandemic

Businesses across all industries, especially those with some of the biggest declines of employment‡ include leisure and hospitality (48%), restaurants (48%) and taxi and limousine services (22%). Even businesses like fitness equipment, landscape, grocery stores and liquor stores that flourished during the pandemic will have to reevaluate hiring practices and supply chain disruptions that are affecting business owners across the country.

As we’ve seen from our clients, the key to weathering the upheavals of market shifts and changing consumer demands strategic agility. Here are some tips for staying financially nimble during economic changes:

  • Analyze business expenses and cut excess spend, negotiate vendor costs,
  • Keep a pulse on your business debt management by speaking often with your lenders about your situation and plan
  • Trim down inventory or supplies to smaller batches, if applicable, to keep more cash on hand
  • Be more assertive with accounts receivables to ensure you convert business deals into cash quickly

Support efforts

To help small businesses stay afloat, the federal government created the Paycheck Protection Program (PPP) as part of the Coronavirus Aid Relief and Economic Security (CARES) Act. Additionally, the federal government created the Restaurant Revitalization Fund‡ and Shuttered Venue Operators Grant‡, two small-business relief programs for restaurants and live-event businesses as part of Covid-19 relief options.

Financial institutions, like UMB, provided support to businesses and customers in a variety of ways. Additional resources included personal loan and mortgage payment deferments and modifications, credit card repayment and payment deferral options, access to additional credit lines as well as options to increase mobile limits and refunds for service fees or charges.

There has also been a proactive push by consumers to support small businesses versus larger corporate entities that were minimally impacted by the pandemic. During the height of the pandemic in 2020, the Cox Business Consumer Sentiment Survey on Small Business‡ reported that 68% of respondents wanted to support small businesses in their community, while 70% planned to increase their support of small businesses as Covid-19 wanes.

These programs and the increased consumer support could allow you to lean in to your community and customer base to help offset challenging market conditions. And, consult with your financial partner to ensure you’ve explored all the available financial programs available to you.

Current small business challenges

Despite the positive moves Americans, the federal government and the banking industry have taken to help small businesses stay afloat, they still face challenges.

As business slowly starts to get back to normal and the cities and economy open up, supply-chain disruptions are taking a heavy toll on small businesses that have fewer resources to absorb or push back on price increases, resulting in revenue loss, inflation costs, decrease in a market share and production issues—ultimately impacting a company’s bottom line.

Additionally, small businesses are struggling to fill open positions based on a variety of factors including fear of contracting Covid-19 and rising cost and/or limited access to daycare. As of February, there are more than 11 million job vacancies available in the U.S. Without employees to support small businesses, more of these businesses may fail.

Finally, inflation in 2022 has become a significant concern, with one in three business owners identifying it as the primary worry‡ in the small business community.

Some methods for confronting these challenges include:

  • Because of the supply chain issues, you may need to order materials in advance if you can predict what you will need for the next several months to a year.
  • Consider working capital financial solutions to help your business access cash faster
  • Optimizing processes and embracing technology to further reduce costs without losing the value of your good or service
  • Restructuring pricing to align with current market and inflation (but be wary of over correcting in the event of upsetting loyal customers)

Planning for the future

As small businesses continue to feel the impact of the Covid-19 pandemic, it’s important for owners to know they are not alone. In addition to government support and consumer buy-in, small business owners should lean heavily on their financial advisors and bankers to help them navigate these unique times.

In turn, banks need to support their clients and nurture the relationships by offering smart solutions to get them back on track. From assisting with lending options, cash flow management to employee benefits and everything in between, trusted advisors serve as a partner to help small business find success in a post-pandemic world.

Our small business specialists are ready to help you with your small business financial needs through guidance, support and service. We also offer a series of online tutorials to help your business succeed. We’re always adding new topics that we believe can help you build and manage your business. Explore our small business courses.

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