Small Business Management
Do you remember the time you enjoyed an elegant, delicately baked croissant with your favorite fillings inside at your neighborhood bakery? How about that time when your car broke down and you took it to your local shop for repairs and you were back on the road? And the time your high school senior was confused about her college choice, but your independent consultant walked her through the options and instilled hope about her future?
Your favorite neighborhood bakery, your local auto mechanic shop, your child’s independent educational consultant, and every single 32+ million small business owner in this country1 have one thing in common: value. They aim to provide more value to you, the customer, than the money you pay them. That’s who entrepreneurs are, that’s what they do, and that’s what keeps them going. Along the way, there are internal and external hurdles, like in any business-, but the entrepreneurs’ focus on value is unwavering.
Textbooks define these hurdles as “weaknesses” if they are internal for a business, driven by the internal capacity or mishaps, and “threats” if they are external, driven by external forces outside of the control of the business. Let’s look at what the world of business is facing in terms of threats in summer 2022 and beyond as we attempt to recover from COVID-19’s impact:
- U.S. inflation rate has surpassed 9%, one of the highest in history2
- Interest rates are being raised to battle the rising inflation3
- U.S. unemployment rate is around 3.5%, one of the lowest in history4
- Great Resignation is causing labor movement vertically and horizontally across industries and companies5
- Technology-driven or remote work has not only entered our vocabulary, it has started to define the workplace and industries.
- Production delays and logistics disruptions caused by the factors above lead to supply-chain issues that will bleed further into 2023.6
All of these threats put pressure on your favorite neighborhood bakery, your local auto mechanic shop, your child’s independent educational consultant, and any small business owner you know and love. You might say, “Well, it puts a pressure on everyone, every business, and every consumer.” Yes, but 32+ million small business owners in this country employ almost 50% of the entire U.S. workforce7, meaning one in every two readers of this blog post is likely employed by a small business. Because of the relatively limited resources of a small business, external threats above put extra pressure on them as they focus on value delivery for their stakeholders: partners, employees, customers, vendors, and outside support systems. This is how it all trickles down to your consumer price index (CPI), and eventually the dent to your pockets.
In other words, if you opt to eat the same quality, delicious, elegant, and delicately baked croissant with your favorite fillings inside at your neighborhood bakery from 2019, the price for it has increased to match the value you get for it in 2022. Because you wouldn’t expect your bakery to reduce the quality of the ingredients (and neither would the owners), the result is the higher priced croissant. What you, the consumer, should never do is to ask for a discount, bundle, or some other value-killing proposition (or insult) to give you a BMW 7-series for the price of a Kia. And you would be surprised how often and common a small business owner is asked to do just that. It is an insult to their work, sweat, tears, time, money, and… value.
Instead, entrepreneurs continuously explore ways to provide you with more value, even if the price hike for their product and services seems to hurt everyone involved: extended warranties, free/included delivery, service plans, convenience features, and even partnerships with their competitors to provide you with a more complete experience and satisfaction. All of these ways cost money; they have value. It is not the $12 croissant that seems so ridiculous at first; it is what else you get with it and how you feel about it after you buy it, share it, or eat it.
So, next time you crave your favorite baked goods, your car breaks down, or your daughter is stressed about her college choices, pick your favorite entrepreneur to address those needs, especially in the face of rising costs, inflation, lack of a reliable workforce, and supply chain issues. It means more to them, and you get more from them than the sticker price you paid despite all the issues.
References
[1] Mohsin, Maryam, “10 Small Business Statistics Every Future Entrepreneur Should Know in 2022,” Oberlo, Jan. 1, 2022, https://www.oberlo.com/blog/small-business-statistics
[2] Rockeman, Olivia, “US Inflation Quickens to 9.1%, Amping Up Fed Pressure to Go Big,” Bloomberg, July 13, 2022, https://www.bloomberg.com/news/articles/2022-07-13/us-inflation-accelerates-to-9-1-once-again-exceeding-forecasts
[3] Dickler, Jessica, “Another Major Interest Hike is Coming from the Federal Reserve: Here are 5 Ways it Could Affect You,” CNBC, July 20, 2022, https://www.cnbc.com/2022/07/20/5-ways-the-federal-reserves-next-interest-rate-hike-could-affect-you.html
[4] US Dept. of Labor, “The Employment Situation—June 2022,” Bureau of Labor Statistics, July 8, 2022, https://www.bls.gov/news.release/pdf/empsit.pdf
[5] Kelly, Jack, “The Great Resignation is Turning into the Great Uncertainty,” Forbes, July 19, 2022, https://www.forbes.com/sites/jackkelly/2022/07/19/the-great-resignation-is-turning-into-the-great-uncertainty/
[6] Benigno, Gianluca, et al., “Global Supply Chain Pressure Index: May 2022 Update,” Federal Reserve Bank of New York, May 18, 2022, https://libertystreeteconomics.newyorkfed.org/2022/05/global-supply-chain-pressure-index-may-2022-update/#:~:text=Supply%20chain% 20disruptions%20continue %20to, strains%20on%20global%20supply%20chains
[7] JP Morgan Chase & Co., “Small Businesses are an Anchor of the US Economy,” accessed July 28, 2022, https://www.jpmorganchase.com/institute/research/small-business/small-business-dashboard/ economic-activity#:~:text=48%20percent%20of%20all%20US,percent%20in%20the%20early%202000s