Fears of a recession loom darkly over small business owners, but Sydney Rieckhoff left the Goldman Sachs 10,000 Small Businesses Summit in Washington D.C. held July 19-20 feeling hopeful for the future after airing her concerns and presenting ideas to state representatives. “I think everyone — at least in the meetings I went to, regardless […]
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Fears of a recession loom darkly over small business owners, but Sydney Rieckhoff left the Goldman Sachs 10,000 Small Businesses Summit in Washington D.C. held July 19-20 feeling hopeful for the future after airing her concerns and presenting ideas to state representatives.
“I think everyone — at least in the meetings I went to, regardless of political leaning — came out with a very optimistic view,” Ms. Rieckhoff said. “We felt we could truly advocate for some of the experiences that we’re going through. We gave a lot of personal examples to try to make it feel as real as possible and I’d say it was pretty effective.”
The more than 2,500 small business owners listened to keynote speakers, participated in breakout sessions and watched fireside chats on day one before meeting elected officials at Nationals Park, home of Major League Baseball’s Washington Nationals, on the final day.
Chief among the issues Ms. Rieckhoff wanted to ask elected Iowa officials Rep. Ashley Hinson, Sen. Chuck Grassley and a representative from Sen. Joni Ernst’s office was about the impacts of inflation and supply chain woes on her business, as well as the importance of reauthorizing the Small Business Administration (SBA) — something that has not happened in more than 20 years.
What does reauthorization do?
Reauthorization, or modernization, of the SBA is a sentiment that has gained traction among business owners across the United States, according to 88% of respondents surveyed by Goldman Sachs ahead of the summit who agree it would be a good, helpful step.
“What reauthorization typically does is allow for reimaging of a program,” said Bill Shear, director of financial markets and community investment for the U.S. Government Accountability Office. “The program could be changed or adjusted in some way to meet needs based on current conditions…reauthorization can provide a vehicle for rehabilitating the program.”
While Ms. Rieckhoff acknowledges the SBA is a great resource for businesses — either through Paycheck Protection Program (PPP) loan forgiveness, business counseling or as a connection to various initiatives — she thinks there is a lot of room for improvement.
“I think it would be good to bring a little bit of additional spotlight to the SBA,” she explained. “A lot of times by the time [small business owners] come to know about the SBA or go to seek resources, there were probably a lot of items they missed along the way that would’ve been useful.”
She noted reauthorization can help shift the priorities and objectives of a government body to help the modern business owner.
Some of the most recent efforts to modernize the SBA came from Sen. Marco Rubio, R-Florida, in 2019. His reauthorization and improvement act would’ve set out to replace outdated export programs, provide patient capital for small business innovation, increase federal funding for research and development, improve access to entrepreneurial development programs, cut antiquated programs and reduce red tape implemented by federal agencies.
Pandemic changes everything
The need for a closer look into the SBA may be even more important following the effects of COVID-19, although reauthorization doesn’t immediately affect the implementation of a program like PPP. Still, widespread changes can reflect a potential need to take a closer look, said Mr. Shear.
“Everything has changed drastically for the SBA since the pandemic started between the PPP and Economic Injury Disaster Loan (EIDL) program,” he said. “You had huge expenditures in response to the pandemic to come to the aid of small businesses. And then you had the Restaurant [Revitalization Fund] and Shuttered Venues [Operator Grant] programs added to that. So, you had a big expansion in SBA actions.”
These programs have been extremely successful, and necessary, but fraudsters have certainly taken advantage of the government’s help, though the extent of which will be unclear for years to come, he noted.
Other times it can be confusing to know where to look as a small business owner wanting help, particularly in a rural state like Iowa where owners can access information from agriculture development programs, economic development programs and other agencies before even thinking about the SBA.
“When you do have issues of overlapping fragmentation…I think of how important it is to have collaboration among the agencies, and how to get information out to constituents,” he said.
“There hasn’t been a large push for reauthorizing, especially since the SBA still works pretty well,” Ms. Rieckhoff said. “It just needs a little bit of tweaking in order to be poised for today’s business environment.”
Not immune to workforce challenges
Almost Famous Popcorn’s acquisition of Noble Popcorn in March widens its footprint from Cedar Rapids and Des Moines. But while business is good, the 23-year-old Stanford University graduate has found herself worrying about the potential effects of an economic downturn.
“We want to be able to continue to partake in these high-growth activities, but there’s also this thought in your head,” she said. “Do we need to think about recession proofing ourselves versus pursuing the highest amount of growth possible?”
Almost Famous is in the final stages of acquiring “a few hundred thousand dollars worth” of equipment from a Chicago-based popcorn company shutting down. Not only is acquiring the equipment more time-effective than buying brand new equipment and waiting for lead times upward of a year, the new supplies will overhaul the bagging process and could address workforce challenges.
“We will look to start automating the bagging process, or much of the bagging process, for popcorn,” Ms. Rieckhoff said. “Today, that’s an incredibly manual process and one of the areas we’ve had the hardest time finding people to recruit because after a couple days of constantly doing that, your hands start to get sore. It’s pretty tedious.”
She says that the move will allow baggers to be placed in other roles that in the long run will be more fun.
Exploring other resources
Beyond talking with elected representatives, Ms. Rieckhoff used the summit as an opportunity to talk to other business owners and learn of resources that could be applied back in Cedar Rapids. One such resource is The Mom Project, an online talent marketplace that connects moms with jobs. She thinks this is a potential solution for her business to find workers.
“I’ve found some moms are trying to get back into the workforce but don’t want to work hours outside of school time, which could make a lot of sense for our retail locations and partner production facilities,” she said.
Goldman Sachs’ Small Business Voices survey found, in addition to 93% of business owners worried a recession will occur in the next year, that 84% of owners believe hiring challenges have stayed the same or worsened over the last three months, with 97% of those respondents saying workforce shortages have affected their bottom line.
Inflation, the other main concern of Ms. Rieckhoff and other owners, is shared by the vast majority of attendees: 97% of small business owners say inflation has remained steady or worsened in the last three months, while 65% of businesses have needed to increase their prices to offset inflation.
“We’re sitting here trying to figure out our holiday pricing and have really been trying to drag our feet on having to do price increases, but we are looking at some kind of unique options, like perhaps an inflation surcharge that we’re hoping to be temporary,” she said.