All of 2021 I've been funding companies through covid lock downs, supply chain disruptions, hiring crises, stimulus loan delays and inflation.
From the looks of things now, this new year is set to have some formidable challenges of it's own. Here are are some of the things I feel will affect business owners the most over the next 12 months and some thoughts about how best to deal with them and even profit from them.
HIRING & PERSONNEL -
“One of the biggest problems for small businesses is the lack of workers for unfilled positions and inventory shortages" - NFIB Chief Economist Bill Dunkelberg
As reported in NFIB’s monthly jobs report, 49% of owners reported job openings that could not be filled, a decrease of two points from September. The problems finding and/or keeping qualified employees will continue and perhaps even increase in some areas. As long as covid-related jobless benefits continue there's little incentive for job seekers to work and, if the OSHA mandate is upheld by the Supreme Court in early January then all companies with over 100 employees will face worker losses.
SUPPLY CHAIN & DELIVERY ISSUES -
"Supply issues have been a big problem for small businesses, and relief is still a ways off. Business owners will need to figure out how to be creative and agile with their processes, whether by working with multiple suppliers or by trying to streamline their inventory catalog."
Getting supplies on time with predictable pricing is difficult now for any business who rely's on shipping because everything changes at different stages of the process making planning impossible. Have extra working capital on hand to cover dead spots or delivery delays and try to source from multiple suppliers if possible.
COVID-RELATED RESTRICTION & MANDATES -
Depending on what the Supreme Court decides this week new enforcement might begin for the vaccine mandates through OSHA for companies with over 100 employees. I won't get into the "right or wrong" about mandates in general but I can say without a doubt they will cause disruptions and critical failures for many companies. No business can survive losing 10-20% (or way more) of their employees in one swoop, they just can't.
Other companies who either don't comply because they operate in states which offer them protection from OSHA enforcement or they have fewer than 100 employees will have the advantage since they're unaffected. Some business owners will see the value of experienced employees who are suddenly looking for work that would never be in the job market were it not for the mandates.
MONEY & DEBT -
"The net percent of owners raising average selling prices increased seven points to a net 53% (seasonally adjusted). Six percent of owners reported lower average selling prices and 57% reported higher average prices"
Prices are fluctuating more than in the past and planning things like inventory purchases, energy costs and overhead is chaotic at best. Overcompensating for expected delays or shortages sometimes causes dislocation resulting in "fits & spurts" of activity which can cause serious problems.
Working capital is more accessible now than before from a variety of sources including alternative lenders. The fixed rates make it beneficial when prices of goods keep rising. Taking on debt isn't always profitable but when prices for basic goods goes up but the price of the money stays the same it works to the benefit of the borrower.
Here's wishing all my business owners, friends and associates a happy, healthy new year!