The best place to start is by explaining what independent businesses are and how they're different from small businesses. What makes a business independent is its ability to function independently without external influence beyond the parameters of the market they are working in. What this means is that they do not affiliate with another business through common ownership. The distinction between a small business and an independent business can be easy to miss since they are not mutually exclusive. Where small businesses often form partnerships or deal with other local businesses or larger corporations to help their growth, independent businesses do no such thing.
For example, here at Interactive Accountants, we work with Amazon DSPs (Delivery Service Partner), and while they are small businesses, they are not free from influence outside of their office. However, the biggest difference between an independent business and other business types is that they do not have shares to distribute on the stock market, meaning that they are the sole property of the owner/CEO. This concept of single ownership extends to business partners as well; for a business to truly be considered independent, they are owned by a single owner. The one common exemption from this rule is if a spouse is a co-owner because it is a joint source of income.
In this newsletter, we would like to share some news in the independent business world, give our thoughts, and hopefully offer some advice to you along the way.
The most crucial piece of news we have to share with you is the 2021 National Federation of Independent Businesses Jobs report. In the report, the NFIB found that many small and independent businesses still have difficulty finding qualified and willing employees. Within this finding, there are a few key variables to focus on.
The first and most intimidating statistic is that around 95% of surveyed businesses are receiving little to no attention on their job openings, of which 49% could not fill their job openings. Only two months ago, in December 2021, the NFIB recorded that 60% of small and independent businesses were actively trying to hire new staff, of which 28% are planning on creating new jobs over the next few months in 2022. Essentially, this report confirms what many of us have seen in our daily lives, that businesses are understaffed. We have all seen it, whether the grocery store only had 5 out of 15 checkout lines open or the slow supply chain across the US.
The industry we have seen become the most affected by this labor shortage and covid complications has been the restaurant industry, from mom-and-pop places to chain restaurants across the country. The reason for this is due to the fast-paced and high staff nature of the food-service industry. Between the impact from covid and the already high demands of the restaurant world, it is unfortunately not surprising that restaurants are feeling the effects of being understaffed the quickest.
While a great deal of blame for the situation can be blamed on covid, it doesn't fix the issue facing American businesses. Given the unpredictable environment that companies face, adaptation is their best hope not to end up in the red. Businesses have chosen to combat these chronic low employment levels through a few different approaches.
Beyond the labor shortage and supply chain slope, there are a few other important variables to consider right now. One of these variables is the stock market. Whether done in an office on wall street or a mobile trading app, the stock market has a great deal of power over the financial aspects of what smaller businesses will be dealing with. Arguably, the biggest variable we have seen hold power over the business world is the evolution of technology and the levels of communications it opens up for us. On the one hand, it is a great tool that speeds up many processes that the world market has to go through, yet there are some drawbacks. For instance, one supposed con we have seen is that there are fewer people interested in jobs that take up more time with the increasingly digital world we live in. Time is the most valuable currency. Right now, many workers either think their time is worth more than what businesses are offering or are interested in finding new ways to use their time to benefit their new business ideas.
To go back to a topic previously touched upon, American businesses are fast-paced, whether they are in the food-service industry or not. Between incorporating eCommerce and online transactions to speedy delivery, business in America thrives on speed. So the question becomes less about the issue and more about ways to thrive within the current conditions. The best way to discover how to thrive in a new environment is to understand your strengths and how your business can play them up.
Depending on what your small or independent business does, this reality can mean a few different things. The first and most universal of which is the fact that now is the time to focus on new strategies and not to be afraid to try new methods. As previously mentioned, some businesses have decided to tackle this problem by increasing their hourly pay rates, while others have set about finding new hiring strategies.
Individually we would love to consult with you and your business to help create an effective business strategy to address your individual concerns and help you succeed. Here at Interactive Accountants, assisting businesses to grow and succeed financially is our number one goal. We are here to help because the better you do, the better we all do! If you're still not convinced yet to give us a call, feel free to look at our other blogs regarding the help we offer various businesses and offices.
If you are a professional in any field that these tips apply to, schedule a free consultation here with our owner Matthew Shiebler, CPA. He's been practicing accounting for over 25 years now and is a business owner, just like you!