Small businesses are the life blood of the U.S. economy, but the current economic environment is proving to be especially challenging for them.
At last week’s 10,000 Small Businesses Summit, more than 2,500 small business owners convened in Washington, D.C., to share their entrepreneurship experiences and advocate for meaningful policy changes. In the latest episode of Exchanges at Goldman Sachs, recorded on site at the Summit, Asahi Pompey, president of the Goldman Sachs Foundation, and Joe Wall, a managing director in the firm’s Office of Government Affairs, joined host Allison Nathan and two small business owners, Natalie Kaddas and Merv Cutler, to talk about the crucial tests small companies are facing — and the opportunities they see.
Hiring challenges are an especially big concern for small business owners. Cutler, who founded San Diego-based Cutler Engineering & Technology Services in 2014, says he has been looking for an IT engineer for two and a half months but can’t compete with the larger companies. “My challenge has been how much money do I spend?” Cutler says. “So it’s really, really challenging for the small business community to keep up with that kind of demand when I’m going against large businesses that have that resource internally.”
Supply chain delays and rising prices are forcing small business owners to change their strategies. “We’ve also absorbed quite a bit of costs. From a supply chain perspective, we’re purchasing differently. So we’re intentionally purchasing a lot more inventory, and we’re carrying that,” says Kaddas, who runs a plastics manufacturing business in Salt Lake City. “The good side to that is we’ve been able to win business because others haven’t been able to deliver, so we have won some contracts that way. But it does tie up your cash flow, and it’s a balancing act that we’re looking at on a daily basis.”
Addressing small business owners’ challenges will take a multifaceted, multiyear approach. “There’s not sort of a silver bullet,” says Wall, who says a step in the right direction would be for Congress to upgrade federal programs for small businesses. “The number one issue on our agenda is that the Small Business Administration, the federal agency that is charged with providing small businesses with the resources they need, has not been reauthorized by Congress in the past 22 years,” Wall tells host Allison Nathan. “And so we view that as the umbrella to fix a lot of the problems, whether it’s providing more workforce-related resources to small business, child care resources, retirement benefits.”
Despite the hurdles, small business owners are pivoting to meet the challenges. “One of the most interesting things that we’re seeing as I talk to business owners across the country is that we’ve moved beyond the pivot to the permanent,” Pompey says. “Business owners who pivoted as a result of the pandemic are finding that a lot of the changes that they made, those new products that they introduced, those new services that they’re offering, they in fact are pretty good, they’re working well, and they want to keep them.”
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