Small businesses in Arkansas face multiple challenges to stay afloat
Small-business operators are wary of the future as the nation this week celebrates the industry’s contributions to the economy.
National Small Business Week, beginning Sunday, is honoring companies at the core of job creation in our state and across the U.S. at a time when many feel eco- nomically vulnerable as stubborn inflation and persistently high interest rates threaten profits.
There’s a lot at risk — small businesses (companies with less than 500 workers) represent more than 99% of companies in Arkansas and the nation. In the state, small businesses employ nearly 50% of the Arkansas workforce, similar to the U.S. average, federal statistics show. Arkansas has more than 264,000 small businesses and there are more than 33.2 million in the U.S.
Nationwide, from 1995 to 2021, small businesses created 17.3 million net new jobs, accounting for 62.7% of net jobs created since 1995.
Yet challenging economic conditions are threatening many business owners who feel poorly prepared to survive, much less expand their operations, according to a survey of the state of small-business marketing efforts across the nation.
Four out of five small businesses — 81% — told Constant Contact, a digital marketing firm, they have no confidence in their ability with the tools they have to weather an ongoing economic battering.
Another report from WalletHub notes the bleak conditions threatening small businesses, which says rising inflation remains their top concern — as it has for a year now — as prices for equipment and supplies keep going up.
And owners, already desperate for capital in a tight lending environment, are using personal credit cards more often to cover expenses that can’t be passed on to customers. More than 60% of small companies say their business needs additional financing now more than it did 12 months ago. Price increases likely will continue, owners told WalletHub, with 64% of business owners expecting inflation to persist.
Last month, the National Federation of Independent Businesses reported a souring outlook among small businesses as the agency’s optimism index plummeted to its lowest level since December 2012.
Owners are pulling back on plans to fill open positions and just 11% of companies indicated they intend to create new jobs in the next three months.
Small businesses are tested by the same economic anxieties of daily life, according to Katie Burns, state director of NFIB operations in Arkansas. “Any challenge that you feel as an everyday Arkansan, a small business is going to feel that same challenge — multiplied on various levels,” Burns said.
Costs of goods, equipment, parts and supplies all spike with soaring inflation — and many small operators are absorbing the costs to retain customers.
“Inflation is something that continues to be a problem,” Burns said. “In order to keep those customers you have to determine what that market can hold. A lot of Americans and Arkansans are strapped and disposable income is a lot less, so businesses are making the decision to eat some of those costs.”
Absorbing costs to retain customers is a way of life for small businesses today and expense increases also factor into wage decisions, with employers scrapping to maintain competitive salaries. “They’re absorbing more costs to pay good wages,” Burns said. “Small businesses are making huge sacrifices and absorbing more costs to make absolutely sure they maintain the really good employees they have. They can’t afford to lose them.”
National Federation of Independent Business Inc., a trade and lobbying organization, represents 4,000 small businesses in Arkansas and more than 300,000 nationwide.
Small businesses have welcomed recent efforts in Arkansas to cut taxes, Burns said, noting that any economic relief will help. “That brings optimism to small businesses when you see tax cuts in the state where you’re operating businesses. I think we’re in a good position from a tax perspective to see that optimism grow.”
Federal, state and regional economic agencies are sponsoring events through May to spotlight small businesses.
The U.S. Small Business Administration is holding a virtual summit Tuesday and Wednesday to provide free business resources, multiple peer-to-peer networking rooms and business advice from small-business mentors. More information and registration are available at sba.gov.
The Little Rock Regional Chamber of Commerce will present awards May 9 to small businesses in five categories at the organization’s annual Small Business Impact Awards. The lunch, at the Robinson Center Still Ballroom in Little Rock, will honor the small business of the year and the female-owned business of the year along with other categories. The event will recognize the contributions of 15 small businesses operating in Central Arkansas.
Minority- and female-owned small businesses will be featured May 29 at the Arkansas Economic Development Commission’s daylong matchmaking event at the Clinton Presidential Center in Little Rock.
Small-business owners will be matched with potential private and public sector customers that are interested in the goods and services the company provides. Registration for sellers is $15 and more details are available at info.arkansasedc.com/matchmaking2024.
AI FOR GRAPHIC DESIGN TRAINING
Small businesses have an opportunity May 14 to learn how artificial intelligence can transform their operations by relying on the technology to enhance graphic design and marketing efforts.
The online session is scheduled from 2-3:30 p.m. and will delve into artificial intelligence tools such as DALL·E 3, Imagine and Canva Magic to demonstrate how the tools can help marketing, product development and customer engagement for small businesses. Participants will be taught how to generate creative visuals, enhance product designs and create content that engages with customers.
The event also will demonstrate real-world examples of small businesses that have integrated innovative artificial intelligence technologies to drive growth and innovation.
No prior expertise in artificial intelligence is required. Registration and details are available at asbtdc.org.
WESTROCK SUSTAINABILITY
Westrock Coffee Co. last week announced its sustainability progress in 2023, with the Little Rock coffee and tea provider touting its commitment to responsible sourcing, supply chain transparency and environmental conservation.
During the year, major achievements included enhancing production of Latin American farms in the company’s sustainability program; expanding sustainability initiatives in the tea business; and improving resource and waste generation facilities to reduce landfill usage by 64%.
“At Westrock Coffee, we are seeing an industry shift from sustainability efforts as isolated projects to a key component of our industry’s future,” said Brooke Cantrell, vice president of sustainability. “We believe financial empowerment of farmers is key, alongside ecosystem protection, and responsible sourcing.”
Westrock in January opened a manufacturing and distribution center in Conway that is projected to have 900 employees by the end of 2026, when the company estimates it will achieve full capacity.