The Small Business Pivot
The slowing economy and volatile markets are posing major challenges for those at the heart of the U.S. economy — small business owners. But despite inflation, rising rates and ongoing labor shortages, small business owners remain optimistic about the road ahead. From launching new shelf-stable products to accessing local partnerships, small business owners are tapping their creativity and resourcefulness to connect with customers. Our Pivot series follows the personal stories of seven graduates of the 10,000 Small Business program who are perfecting the art of the pivot.
Small Business Owners Get Creative Amid Supply Chain Delays, Rising Costs
When supply chain delays and pandemic lockdowns shut down Sari Wiaz’s Baby Paper business, she had to get creative.
“We did a lot of virtual trade,” Wiaz says, who also created a website to ship products directly to customers or direct them to the nearby retail stores that carried her products. “I converted my office and actually got large pictures of all my sales reps blown up behind me so that when I would do these trade shows, people would see my staff behind me,” says Wiaz.
But as the supply chain delays and higher prices continue to hurt her profit margins, Wiaz says she is looking at sourcing some of her materials from India. “We do most of our sourcing overseas in China and we’ve looked for many years to try to figure out how to bring it to the U.S. but I’m a small manufacturer and I have to be able to compete against larger companies for that shelf space in the retail space.”
The ongoing supply chain delays have wreaked havoc on small business owners, many of whom are changing their business models to adapt. In many cases, those changes are becoming permanent.
Rising Fuels and Raw Material Costs
Rising fuel and raw material costs have been especially difficult for small business owners, such as Chris Fluharty who runs a construction company in Cleveland, Ohio. Many of the projects that Fluharty bid on more than a year ago are now costing him exponentially more given the sharp rise in fuel, as well as the delays in obtaining the materials needed to complete the projects.
“In our industry, it’s not uncommon to have lead times of four to 12 weeks,” he says. “It’s amazing that we, in construction, are seeing the lead times that we are. We used to see in worse-case scenarios lead times that would be 20 to 24 weeks.” Today, he says, he’s facing delays of more than 60 weeks to get the materials he needs to complete his projects.
Focus on Employees
The supply chain delays are leading to lost work, and with it, a closer focus on employees.
“When we have a repair, the truck goes into the shop and they tell us that we won’t have this part for four to six weeks,” says Rhoni Thompson is the president and CEO of R.L. Cole Enterprises, a trucking company based in Cleveland, Ohio. “So that affects your employee retention [because] your employee is without a job in essence for that period of time.”
Still, Thompson enjoys what she does as a small business owner. “The ebbs and flows are problematic, but I what keeps you going is, for me the enjoyment. And then when you step back…I have a big responsibility. I have employees that have children and families. And so that I think is what keeps you going.”
To help diversify her business, which primarily relies on government contracts, Thompson is working on building relationships with private companies. She’s also focused on building a stronger employee culture. “I think the culture you create with your employees and your business is extremely important,” she says. “This was our first year that we had our company party…I felt it was very important that my guys – the older ones that had been there with us very generations – that we recognize them in front of their families. I let them know the vision that I think we can do this for another 20 years.”
Sari Wiaz, Chris Fluharty and Rhoni Thompson are graduates of Goldman Sachs’ 10,000 Small Businesses program and shared their stories at Goldman Sachs’ 2022 10,000 Small Businesses Summit in Washington, D.C.
More from our 10,000 Small Businesses Pivot series: