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Small Business Gets Big Government Headaches

June 12th, 2019 by Kenneth Abrahams


If you have read the papers, listened to the news or followed certain Twitter accounts you are probably under the impression that businesses nationwide are booming. While there may be some truth to that, it is not all businesses that are seeing this fantastic upswing. Recently, I was chatting with two people that either own or help manage very successful businesses and the two conversations couldn’t have gone more differently. Business number one is a small retail chain that relies on the public for its income. While the second needs a much smaller customer base to be successful. Their niche is more tied to the housing and home improvement sector.

 

Business number one is seeing an erosion of consumer confidence. Year-to-date sales are softer than they were a year ago and promotions that they ran in the first half of 2019 are not fairing as well as they did in 2018. It should be noted that they are running the same promotions with the same incentives that they ran last year. Their take on the issue is that people are much more cautious with their discretionary income than last year and there is concern over an economic decline or an escalation in the trade wars with China. While business number two talked about an unprecedented year of success with no signs of slowing down. His workday is starting at 7AM and ending at 8PM and he has the opportunity this summer to bring on a few additional employees for this busy season.

 

Depending on the statistics that you read, small businesses account for 75-80% of the businesses in this country. That means that they/we are significant drivers to the economy. Over the last several years, we have all been faced with a number of challenges. First came the Affordable Care Act which, for many small businesses, was anything but affordable. Many in small business saw our health insurance costs increase 25-35% the first year under the ACA and that was followed in year two by a 15-25% jump. As a result, companies either cut workers hours to get them below the full-time threshold, increased employee contributions, or provided less comprehensive coverage in order to save money and be able to keep the doors open. For many of us, it felt pretty lousy. Our employees are our lifeblood and we want to protect and care for them but without drastic price increases, which hurt our clients, it was hard. Just as we are starting to see the light, trade wars between the US and China have begun and small businesses are about to take it on the chin again.

 

For the second time in less than a year, we have been hit by a rash of notices that vendors are going up on their prices. Last fall, when the tariffs originally increased, we were able to creatively absorb those costs and save our clients a price increase. This second wave is more significant and wider spread and it is impossible for us to shield our clients from a price increase. To compound the problem further, inventories are down, and it is becoming impossible to get certain products that our clients are asking for.  We know that for many of our clients this will hurt and for that we apologize. Unfortunately, we do not have a crystal ball or a way to look into the future so, for now, we can only hope that these increases are temporary.

 

 

Ken Abrahams is co-owner of FUN Enterprises. For better or worse he is a sociology major and not an economics major. Perhaps he shouldn’t have dropped that Micro Economics class in college. Like many of you financial stuff makes his hair hurt.

 

Photo by Markus Spiske on Unsplash

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