Advice for small biz: 2023 may get rough, but don't stop believin'

The past year has been quite a roller coaster for small businesses with supply chain shortages, inflationary pressures and fear of recession looming.

So can next year get any worse?

Well, we’re definitely not out of the woods as far as the potential for a recession, but small businesses might see some relief next year, experts say.

For one, “we’re coming off a low bar,” says John A. Rizzo, an economist and Stony Brook University professor. “This year has not been good.”

On a positive note, he said there’s evidence that inflation is coming down and “the labor market remains very strong on Long Island.”

In November,Long Island’s unemployment rate stood at a low 2.5%.

Rizzo also said it’s likely that the Federal Reserve "will increase interest rates by less and less and stop increases after the first quarter of 2023.”

With that said, he feels small businesses should be “cautiously optimistic and not rule out good opportunities.”

Steven Kent, an economics professor in Molloy University’s School of Business, also thinks small businesses might fare somewhat better this coming year in part due to less volatility.

"I think the economy and inflation will start to moderate and we’ll be in a more consistent environment,” he says.

He is concerned, though, that we may see a bit of a pickup in unemployment “especially in the New York area where we are starting to see technology and financial firms laying off people.” Among those are Morgan Stanley, with Goldman Sachs reportedly planning cuts next month. In the tech world, Facebook parent Meta recently announced staff reductions.
"When you see tech companies and financial firms say they are cutting back that does create some level of anxiety,” Kent says.

It also could impact small businesses that may provide goods or services to these firms, Kent says.

Still small businesses shouldn’t shy away from good growth opportunities out of fear, expert say.

“Small businesses should always be looking for opportunities whether it’s direct growth or to improve expense outlay,” says Erica Chase-Gregory, director of the Small Business Development Center (SBDC) at Farmingdale State College.

Christopher Vetter, 37, founder of Deer Park-based Sail Away Coffee Co., a maker of cold brew coffee sold in over 1,000 supermarkets, restaurants, bars and cafes, says he has his eye on growth.

“We have a lot of distribution expansion plans for 2023 so that’s going to lead to exponential growth,” he says. That includes more extensive distribution in the tristate area, their predominant market, and expansion into the Northeast, Mid-Atlantic and Southeast.

He said inflation affected foot traffic in grocery stores this year impacting sales there, but that was offset by growth in other locations like bars, restaurants and offices. Overall the company still saw growth this year thanks to adding 25% to 30% more locations in 2022, Vetter says.

“We’re hoping with a decrease in inflation and people acclimating to this new [economic] climate that foot traffic will increase in grocery as well,” he says. 

Ahmed Ahmed, 26, owner of Uniondale-based Lotus Fitness, a personal training service that specializes in helping those with chronic discomfort, says he’s also optimistic going into 2023.

Despite this year’s economic climate, he said his business saw increased growth this year over last and he expects that to continue. Among efforts, he invested in more mentorships including Fitness Pro Mentors — in-person personal training, business coaching and mentorship program — and also devoted more time to networking to help grow his referral business.

“I think the business is going to continue to grow,” Ahmed says. “I still think of myself as a business in its infancy.”

Like with Ahmed, Chase-Gregory says “there’s optimism in the small business entrepreneurial world” among those coming into the SBDC for assistance.

She encourages businesses to utilize the local SBDC’s to analyze the company’s financials and for help with business planning, which are free.

One area that she predicts will be still be challenging going into 2023 is access to capital given the tight lending market with lenders more cautious given economic uncertainty.

“Risks for lenders are growing so they’re becoming more conservative,” she says.

Still, “If you have a strong business and what you’re looking at has the potential for a positive return on investment, there are lenders out there that will do it,” Chase-Gregory says.

Don’t retreat from good opportunities simply out of fear.

“Don’t back down because you assume things will be bad,” says Rizzo. “All business involves some risk.”

By Jamie Herzlich

jherzlich@aol.com

Herzlich writes the Small Business column in Newsday.