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Economic Impact and Outlook for Small and Midsized Businesses

Economic Impact and Outlook for Small and Midsized Businesses

The group most vulnerable to economic effects is small and midsized businesses (SMBs). With the recent pandemic and the resulting economic downturn, this section of the economy was the most hard-hit.  So what happened (and why), where are we now, and what’s ahead?

 

Where We’ve Been

The recent pandemic caused many challenges for SMBs. As businesses were forced to close or operate virtually, many struggled with managing overhead expenses while sales reached an all-time low.  The resulting lack of capital was only made more difficult by the lack of adequate financing available as lenders (to mitigate their own risks) tightened their belts and added strict qualifications.  Similarly, investors, another source of capital for small businesses, were undergoing the same losses in capital, and those that were still lending found it difficult to tell which businesses would end right side up in the end.  Additionally, last year, we saw consumer trends of lower spending, more savings, and repayment of personal debt.

 

Government stimulus offered many SMBs hope, but difficulty in execution and deliverance of funding also left many business owners frustrated and struggling.  Additionally, while a high unemployment rate typically bodes well for SMBs, making it easier to find in-expensive help; the government stimulus seemed to back-fire by offering many of those unemployed, pay close to or equal what they were making previously – disincentivizing them to find work.

 

All of these pressures lead to many SMBs closing their doors permanently as stimulus money ran out and the effects of the pandemic raged on.  The businesses that faired the best were those that were quick to adapt to the new contactless environment, reduce costs, and in most cases adjust to remote working.

 

One very positive result of the pandemic in 2020 was a new ‘shop local’ mentality which carried many SMBs through the holiday season and into 2021.

Where We Are Now

Despite the adverse effects of COVID-19, some well-prepared and quick to adapt businesses survived. The ‘shop local’ concept that evolved during COVID-19 continues to support small businesses. The government expanded its Paycheck Protection Program (PPP) program – a loan facility designed specifically for small businesses during the pandemic to keep them alive.

 

Opportunity abounds.  While some businesses are still struggling, others are now re-opening and even expanding.   Acquisitions are making a comeback as companies are taking advantage of available real estate.  And as a result of unemployment from company staff cutbacks early on in the pandemic, many new entrepreneurs have emerged with virtual or remote startups; disrupting the market as they enjoy relatively low operating costs.  Finally, many businesses went through a forced exercise in cost-cutting which is sure to benefit them going forward.  And a few industries are booming.

 

Specifically, the construction industry has been booming.  As work-from-home became more prevalent, homeowners began home improvement projects.  And as business owners take advantage of M&A opportunities, renovations and remodels are causing a backlog with many contractors.  Other natural disasters like Snowmageddon and hailstorms Tarrant and Denton Counties contributed to necessary repairs for both homeowners and business owners.  And during the summer months, we saw a huge spike in materials costs, which is only now starting to dissipate.

Looking Ahead

After an extended period of drought and closure, enterprises are resuming their operations.  And as unemployment benefits taper off, employers expect labor shortages issues to being to resolve.  Despite the Delta variant and some social and political unrest, in many ways, it seems society is pushing back and ready to return to “normal”.

 

However, COVID was a major disruptor.  Consumers have adapted to digital technology, mobile solutions, and on-the-go services such as drive-through and pick-up.  Moreover, workspaces have seen a switch toward remote and shared workspaces.  These trends are likely here to stay.  That means SBE will need to continue investing in digital technology, mobile, and virtual platforms, and innovative floorspace design to serve their customers and maintain a leading edge.

 

Keeping the current environment in mind, you must be vigilant when booking a contractor to build, expand or repair your workspace. Ensure they have in-depth knowledge of the skills required to complete the project, and offer guidance on effective cost-cutting methods, coupled with quality and insured work.

 

At A&B Excavation, we care about small to midsized businesses and want to help you thrive. We take pride in our industry knowledge and provide it to our clients to determine the best solution according to their goals and needs. Our work is fully insured, and we have qualified staff with extensive experience. If you’re interested in acquiring services of a quality excavation company, give Art a call today at 940-536-9784.

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