An unstable stock market has led many small businesses (SMBs) to cut costs and change their hiring plans for the New Year. According to the Associated Press, while consumer spending and the economy are strong, consumers are spending less, which has led to worry for many SMB owners.
As a result, cost-cutting has become a top priority. For example, contractors have started using cheaper materials in response to homeowners slashing their project budgets. Developers who build houses are making smaller investments in new properties, said Kathy Barnes, who manages projects in the St. Louis area.
In addition, small business owners are slowing down their plans to hire additional employees. Instead, they’re focusing on looking for more prospective customers and clients. Mark Ehrhardt, owner of Movers, Not Shakers!, a moving company in New York, revealed that he will soon be contacting mortgage brokers and building managers who can connect him with people moving out of their homes. “You just have to be smarter and figure out where the activity is,” he said.
The stock market isn’t the only factor hurting SMBs. It was just reported that, with the federal government in a partial shutdown, around 30 million small businesses will likely be impacted.
For instance, SMBs looking for a loan from the U.S. Small Business Administration (SBA) won’t be getting a response during the shutdown, and even SBA loan guarantees have been suspended during this time. In addition, small businesses that have been awarded government contracts might have to deal with interruptions as a result of the shutdown.
There is also a fall in consumer confidence, especially for businesses located near a high number of government employees. During a 16-day shutdown in 2013, there was an estimated 2 percent to 4 percent fall in spending among government workers, while retail store traffic fell an average 7.3 percent each week of the shutdown.