Navigating New Challenges in Late 2022

How a small business prepares and reacts is crucial to its future success and business prosperity

Earlier this year I shared an article here warning of a looming recession – and now, as we approach Thanksgiving Day, there are even stronger indicators that it is truly drawing near.

Take for instance this recent report from the U.S. Department of Agriculture (USDA), that an average 8- to 16-pound turkey is currently priced at $1.99 per pound in 2022, compared to $1.15 in 2021. That’s a major 73 percent increase. Factors blamed for the increase includes rise in fuel cost, housing, and many other cost of living requirements. ?

In fewer than eight months, the Fed has raised interest rates four times – and they’re not done yet. These measures, coupled with rising prices and inflation, are impacting U.S. businesses, large and small, and companies now must pass much of their higher expense costs on to consumers at the check-out counter.

In another tell-tale sign of a weakening economy, people are now looking for jobs, as opposed to companies looking for workers. Take what’s happening in Silicon Valley for instance, as many of the biggest names in tech who were fighting to fill jobs just last year are now overseeing massive layoffs. Reports are also coming in from Wall Street that Barclays, Citi Group, and JP Morgan Chase have either started downsizing or are soon expected to. That said, as evolving issues such as inflation surface, other challenges ebb a bit.

The good news is that as U.S. businesses approach the end of the year, the supply chain challenges plaguing the marketplace have begun to dissipate. Thankfully, we have been able to mitigate the issues to movement of parts and equipment, although such unpredictable forces continue to impact our operation and others at times.

Tide Has Turned

Still concerning though, is that many economic indicators show that “the tide has turned” with the slow but continued approach of an all-out recession. In fact, rising prices are now impacting everything in life – from home purchases and apartment rental costs to gasoline and aviation fuel prices, food prices, and all types of consumer products.

Adding to more inflationary pressure is that there’s an unfriendly atmosphere in the global energy market too. For example, the war in Ukraine shut down that country’s major agricultural production of grains, which impacted global food prices. Sanctions against Russia also cut off Europe from Russian oil, resulting in less supply and higher fuel prices across the globe.

Pressure is Building

To counteract soaring prices, this year the U.S. Federal Reserve has aggressively raised interest rates in an effort to corral inflation. But it’s worth noting that the pace of those increases is the fastest in decades. In addition, many small businesses depend on U.S. Small Business Administration (SBA) loans to fund and support their operations, and the loan rates have risen 4 percent recently – and are expected to increase even more.

And now that the midterms are behind us, we can expect to see fuel costs increasing again as the federal government removes cost-saving measures employed during the election. Clearly, the change in the government’s policy toward energy continues to be the source of great angst among many American businesses, big and small.

The idea that we have gone from energy independence to energy crisis in just two years – coupled with the ongoing war in Ukraine – is fueling rising costs for businesses across nearly every sector of the U.S. economy.

Timing-wise, many experts believe the recession is not likely to happen prior to year’s end, given consumer spending for the annual holiday shopping season. One recent survey of more than 100 top retail and brand executives revealed that most have “tempered optimism” for the holiday selling season. They expect sales to surpass pre-pandemic 2019 levels but probably not reach 2021’s record-breaking levels, given inflation and other factors.

Regarding timing, I don’t think we’ll feel the major impact of the recession until after the holidays, perhaps four to six months out. But all of us in small businesses need to get ahead of any impending recession.

Best Be Prepared

How so? Having a strong business plan and steady financial reserves remains critical now more than ever. Over the decades, each economic downturn in this country has been different but, for whatever the future holds, it’s important to ‘shore up’ your business by assuring financial stability and being resourceful and creative to deliver solutions to your customers.

During the pandemic era, Thrust Tech thrived by having a prudent approach to finances, innovation in business operations, and expansion of services to assist clients during their supply chain woes. For instance, when others were cutting back, TTA hired more employees and built a strong inventory of aviation parts. That kept customers’ planes in the air and strong revenue flowing to TTA too.

Thrust Tech has been under new ownership and management for five years – building on 35 years of aviation MRO experience by growing our product and services to a larger customer base with innovative solutions and services. We’re adept at proactively assessing customers’ future needs, pivoting quickly as needed and continuing to innovate.

Yes, new challenges including a recession will likely arise. But how small businesses prepare and react is crucial to their future success and business prosperity. That’s why we see many great opportunities ahead to do good business.

Even in challenging times, new opportunities present themselves, which can – and will – allow the business community to emerge victorious.