Small businesses face many challenges. As it so happens, most challenges seem to be financial in nature. Or, at least the challenges faced present financial risks and repercussions. Bayou Bookkeeping & Tax Services supports small businesses daily with professional bookkeeping and financial services. Consequently, we keep a finger on the pulse of what keeps business owners awake at night. That’s why we cover five financial issues small businesses face in this post.
Small businesses feel the squeeze as costs for raw materials and other inputs rise. Shipping, transportation costs, and vendor price increases impact companies all over the U.S. Inflation puts pressure on profit margins, but many businesses are leery of passing on substantial price increases to customers. The result is often a smaller bottom line.
2. Wage Pressures
As the economy continues to tighten, businesses find it difficult to attract and retain quality employees. The cost of benefits and wages continues to increase while the pool of qualified applicants shrinks. This puts upward pressure on payroll and taxes, which increases costs and further squeezes profit. Moreover, current employees sometimes feel slighted when new employees onboard at higher rates. Most businesses aren’t in a position to increase wages across the board to compensate for the shift.
3. Supply Chain Issues
Small businesses often have limited negotiating power with suppliers. Many are at the mercy of large vendors who can dictate terms and prices. This puts small businesses in a difficult position when costs rise, as they have little ability to pass on those cost increases to customers or find new suppliers. Additionally, raw material shortages don’t leave suppliers in the best position either. We are witnessing the effects of supply and demand in real-time and real terms.
4. Digital Transformation
The world is going digital, and businesses must follow suit to remain relevant and visible. An online presence is now crucial for businesses of all sizes. However, website design, digital marketing, e-commerce, and other technological advancements cost money. While the transformation may better position your business, you must still make the upfront investment. Bayou Bookkeeping & Tax Services can help you understand what investments positively impact your financials.
5. Staffing Shortages
The U.S. is facing a staffing shortage, which impacts small businesses more than most. The low unemployment rate and baby boomer retirement are the two drivers. Whatever the cause, staffing shortages can mean you don’t fulfill orders, which leads to decreased revenue. In addition, onboarding new employees takes time, so they don’t immediately perform at 100%.
Bayou Supports Small Businesses
Small businesses have a lot on their financial plates. If you’re feeling the pressure, reach out to Bayou Bookkeeping & Tax Services. We’re here to help you with professional bookkeeping services, small business tax filing, and financial planning so you can focus on running your business. Visit us online or give us a call at (225) 442-1137 today!