July 28, 2022
With the year more than halfway over, many small businesses are forecasting economic upheaval with an anticipated recession adding more stressors on top of already juggling skyrocketing prices due to inflation.
Forbes reported that MetLife and the U.S. Chamber of Commerce found that 85% of small business owners surveyed are concerned about inflation, too. Also, one in three listed inflation as their primary business concern.
Concerns about labor shortages and inflation continue to weigh heavily on the minds of other Michigan business leaders, according to a spring economic survey released by Business Leaders for Michigan. Business Leaders for Michigan conducted the internal member survey in early February.
Business inflation fears
Labor shortages are being felt across all job categories, including in manufacturing, office, and front-line positions, with 85% of survey respondents expecting to have trouble filling positions over the next six-to-12 months.
“We must take significant steps to address the labor shortage across our state,” Jeff Donofrio, president and chief executive officer of Business Leaders for Michigan, told the Michigan Chronicle previously. “Our recent benchmarking study shows Michigan’s labor force participation rate is ranked 41st in the nation, and companies are feeling the effects. The historic state budget surplus gives Michigan a unique chance to increase the number of people with degrees and credentials and remove barriers to work, helping solve these talent gaps.”
NBC News reported that financial experts note that inflation is caused by three main factors: quickly rising labor costs, high energy prices, and interest rates.
Small business owner Desi A. Johnson II, a National Academy of Sports Medicine-certified personal trainer, is confident that his business won’t be impacted by the looming recession.
As the chief executive officer of Des2fit Fit Corporate Wellness and Des2fit, he told the Michigan Chronicle about how, especially over the past two years, he keeps his company afloat through checks and balances even during COVID-related economic setbacks.
Des2fit Fit Corporate Wellness was created to educate corporate America on the latest health trends while helping companies reduce health care costs, maximize their employees’ productivity, boost morale and also help them make wellness a priority in their workplace culture. Des2fit is an elite online coaching division of their company. He and his wife operate as the chief executive officer and the chief operating officer of both organizations.
“We were able to become a recession-proof organization because my company invested heavily in technology; we have become laser-focused on our niche market and we were able to quickly adapt to deliver to our corporate and individual clients due to the uncertainty of the pandemic,” Johnson said of the work that he and his wife, Victoria Johnson, put in.
A projected economic boom
Despite the challenges, 70% of executives say their business is doing better than before the pandemic. In addition, 55% of executives say the Michigan economy will stay the same, 22% say it will improve, and 24% say it will get worse in the next six-to-12 months; 43% say the U.S. economy will stay the same, 28% say it will improve, and 28% expect it to get worse.
According to reports, Black-owned businesses, however, are also thriving despite challenges, which note that the number of Black small-business owners is up 28% compared to before the pandemic.
U.S. News Reports that 1.2 million African Americans are self-employed in 2022 compared to 1.1 million in February 2020.
The biggest increases in business formation came from cities with large Black and Hispanic populations, including Chicago, Detroit, Los Angeles, Houston, and Miami.
Economist Ron Hetrick said, “The good news of this whole thing is, when you see business formations occurring in very ethnically diverse populations, then that would typically suggest that you would start to see increased hiring from these populations as well.”
The U.S. Chamber of Commerce reported that recession-proofing a business is all about being flexible while weathering the storm.
These business tips include:
- Embrace adaptability and be able to pivot
“You can’t be married to any specific strategy, product or service,” said Abhi Lokesh, chief executive officer and co-founder of Fracture, in the article. “You’ve got to be willing to try everything you can, see what works, and pivot accordingly.”
- Cut unnecessary costs and look at expenses and cash flow to help plan for your financial future and avoid overspending.
William Vanderveer, chief executive officer of Redefine Healthcare, recommends accumulating six months’ worth of expenses in savings in case a business’s sales decrease.
- Keep in touch with employees.
“Recessions aren’t just stressful for business owners — they’re also stressful for your employees,” the U.S. Chamber said. “Your employees are feeling uncertain about what the future holds, and they may be worried about losing their jobs.”
Don’t let your business hit a roadblock by not investing.
“Don’t stop marketing and advertising,” Lisa Vitale, business matchmaker at BarterPays! said. “Businesses that continue to invest in themselves and advertise during recessions come back stronger and bounce back faster than those that don’t.”
Despite putting safeguards in place, many Black-owned businesses still face issues with surviving long term.
Black business owner Tracey Clark Jeffries said, “What Black-owned small businesses need is a more structured model that can help them sustain over a period of three to five years.”
Johnson said that sustainability is what he builds his companies around to promote not only health and wellness for customers but continued financial success for his family and business.
“With investing in our own wellness technology, wellness/fitness app and our on-demand programming, this gave us the ability to not be dependent on a brick and mortar or corporate/commercial gyms or even needing corporate training rooms to deliver our services to our clientele,” he said adding that the proof is in the numbers. “We’ve seen record growth for both of our organizations within the past couple of years because we were able to scale and stretch beyond the metro Detroit Area due to streamlining our online/on-demand individual and commercial wellness services.”
He encourages others to recession-proof their business by re-thinking their team.
“Make sure that you have the right people on your team and each person is functioning and running efficiently,” he said. “Don’t add additional help if they are not truly needed, especially when the business is growing. Some additional responsibilities can be delegated [to] existing team members.”
Kevin Johnson, president and chief executive officer for the Detroit Economic Growth Corporation (DEGC), the city’s leading inclusive economic development driver, is invested in crisis-proofing small businesses locally to outlast even a recession.
Johnson told the Michigan Chronicle previously that the pandemic aligned priorities and focuses in the business community and from those supporting the business community.
“When those types of small business services are … disrupted, it has this cascading effect,” Johnson said. “There was a firm commitment by the administration, and tools we had available from the DEGC to bring all of those things together for the outcome that we desire, which was to open as many small businesses in commercial corridors and neighborhoods as we could.”