Small Businesses: Prepare for More Supply Shortages in the Near Future

Small businesses, from all corners of the economy, are dealing with massive shortages. 

Running a business is hard enough in the best of times, but when shortages drive up prices, reduce options for customers, and create disruptions to your work, it can be devastating. 

While the supply-chain shortage has been impacting businesses for months, and is likely to continue, there are solutions. Being nimble, adaptable, and changing how you operate can help you get through this difficult time. 

Fortunately, business have been doing just that since the beginning of the pandemic!

Small Businesses: Prepare for More Shortages in the Near Future

How Has the Shortage Impacted Businesses? 

Each organization is impacted differently, but business from different sectors are seeing similar challenges to their supply chains. 

Restaurant 

The restaurant industry has been, perhaps, the most impacted by COVID-19, mandated shutdowns, and supply shortages. Currently, the restaurant industry, while simultaneously dealing with a labor shortage (as are many industries), is also dealing with a shortage of everything from meat to pickles to small ketchup packets. 

A survey from the National Restaurant Association found that 95% of restaurant operators experienced a supply delay or shortage for “key food and beverage items.” 

Retail 

Retail businesses are feeling the squeeze as well. Business Insider reports that retailers are seen reductions in simple items like toilet paper and feminine products, as well as furniture, lumber, and more. This too has driven up costs, narrowed profit margins, and created product scarcity for retail customers. 

Manufacturing

Manufacturers are largely concerned with two things: 1) the availability of raw materials and 2) the availability of labor. When both are scarce, it’s extremely difficult to operate effectively and profitably. Manufacturers are currently dealing with shortages of raw materials like plastic and steel, and shortages of computer chips are creating issues for a variety of manufacturers. 

What Can You Do to Reduce the Damage? 

While there is little you can do personally to solve the supply shortage, there are some things you can do to help your business stay afloat and even thrive during this difficult time. 

Be Proactive with Ordering

The first, and arguably the most important, is to stay ahead with your ordering. This does not mean panic ordering and bulking up on items you may not need. Rather, it means ordering products and materials well in advance of when you’ll need them, long before you’ve run out. 

As a restaurant, for example, it would be wise to order chicken, beef, or vegetables early, before you have the potential of running out. Retailers may want to stock up on tee shirts or hats (or whatever you sell), while manufacturers should keep an eye on the materials market and order when prices are low or before forecasters are expecting price increases.

Change the Materials You Order 

As an owner or manager, you may have to change the products and materials you order, either because what you normally order is expensive, or because it’s unavailable. This calls for creative thinking. For example, if you are in the restaurant industry and are having trouble purchasing affordable chicken, you may have to start ordering more pork and offering this as an option for customers. As a manufacturer, you may have to look to different materials that can be effective and affordable replacements, such as different metals or cloth. 

Positive Signs Ahead

While it seems bleak, there are positive signs and a heavy amount of optimism among many sectors. A study from Umpqua Bank surveyed roughly 1,200 business owners to gauge their mindset and mood in the current economic climate. 

Not surprisingly, since business owners are inherently optimistic, there was a strong share of positivity. According to their study, more than half of all “middle market” companies and small businesses expect improving conditions in the coming year. 

Many of the businesses said that changes implemented during the pandemic, including staffing and product changes, which were seen as temporary at the time, are here to stay. These changes will help make business more nimble and adaptable, possibly contributing to the market optimism. 

Some business are not just surviving, but thriving. Roughly half of the businesses surveyed expect to acquire another company or expand their real estate holdings. This is a positive sign for an economy that continues to face, and overcome, numerous challenges!

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