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Key Takeaways As corporate profits and stock markets improve, many small business owners feel left behind.
The Bank of America Institute’s data shows small business profitability growing slowly, with a widening gap between higher and lower-revenue firms.
Owners like Bruce Jovaag of Norse Construction describe the current period as uniquely punishing.
Small business owners across the U.S. describe feeling increasingly left behind as the broader economy posts solid corporate profits and the stock market booms.
According to a new report from The New York Times, many small business owners started the year believing the worst was over. Inflation seemed to be easing, and borrowing costs were decreasing.
That fragile optimism has since shattered as inflation has accelerated and the cost of fuel has gone up. For many small firms, even modest increases in input prices or borrowing costs can force owners to freeze hiring or scale back services.
Recent data from The Bank of America Institute shows that small business profitability is still growing, but at the slowest pace in two years, even as costs for fuel, shipping and labor climb. The same research finds that job openings at small businesses have stalled. Owners are hesitant to add staff when they aren’t able to predict how quickly expenses will rise.
The slowdown is not evenly distributed. Bank of America’s report shows a widening gap between the healthiest small firms and those at the bottom of the revenue ladder. Higher-revenue businesses have still managed to expand, while their lower-revenue peers are more likely to deplete their reserves and cancel their growth plans.
“It has been an incredible challenge for a small mom-and-pop operation to just simply keep the doors open,” Bruce Jovaag, owner of home remodeling company Norse Construction, told the Times. Jovaag started the company in 2013 and weathered earlier downturns, but he describes the current environment as uniquely punishing. “It has been a fight like has never existed before,” he said.
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