Surviving, not thriving — the reality for small businesses in 2024

The economy might look better on paper — inflation’s cooling, interest rates are dropping, and the labor market’s loosening up — but for small businesses, it still feels like walking a tightrope. Owners across the US are dealing with rising costs, supply chain issues, and razor-thin margins, and some are just barely holding on.

Take Shilpa Sankaran, the founder of KOSA Ayurvedic Spa in Wisconsin. Her business was named one of National Geographic Travel’s top 21 wellness retreats, but despite the recognition, she hasn’t seen a dime of profit — "I have yet to bring home a single dollar," she says, as costs for supplies like oils have jumped 50%. Raising prices too much could scare off customers, but keeping them low eats into what little margin she has — "Costs go up exponentially every single day," she says.

Shilpa isn’t alone. Many small business owners are still recovering from the aftershocks of the pandemic, when forced closures and staffing shortages threw everything into chaos. Now, they’re dealing with higher utility bills, back rent, and rising interest rates. And for some, the path to profitability feels like a pipe dream.

In Virginia, retailer Jennifer Tartini is facing a different kind of stress. Her shop, Mosaic Collective, sells ethically sourced products, but competing against giants like Amazon and Shein is no joke. With customers cutting back on discretionary spending, she’s worried about hitting her sales goals — “Convincing customers to invest in meaningful purchases while navigating the financial realities we’re all facing,” she says.

Meanwhile, in Maryland, restaurant owner Matt Hetrick is rethinking everything just to stay open. Staffing shortages forced him to streamline operations at his Annapolis locations, even cutting corners on something as basic as french fries — once freshly made, now pulled from a freezer bag.

That storm isn’t letting up. Inflation might not be breaking records anymore, but supply chain disruptions are still causing headaches. Catherine Reynolds, who works in imports for Palmetto Tile Distributors in South Carolina, sees it firsthand. Every delayed shipment means extra fees, and those costs pile up fast — “It just seems we go from one kind of disaster to the next that’s just sustaining these price levels, unfortunately,” she says.

Even businesses in seasonal industries are feeling the squeeze. Enjou Chocolat, a chocolate shop in Morristown, New Jersey, has raised prices three times this year thanks to skyrocketing cocoa costs and higher labor expenses. One longtime customer stormed out after a half-pound of chocolates jumped from $10.99 to $14.99 — “They said ‘that’s just a rip-off, and you’ve lost me as a customer,’ which really hurt to hear," she says.

The stakes are especially high for small retailers heading into the holiday season, which can make or break their year. A recent survey from the National Federation of Independent Business (NFIB) found that 8 out of 10 small retailers depend on holiday sales to meet their annual profit goals. But with consumers pushing back on price hikes, the balancing act has never been harder.

Big retailers like Walmart and Target can afford to slash prices to win over cautious shoppers. Small businesses don’t have that luxury —“Small businesses are really reticent to increase prices, so when they do, it’s because they have to,” says John Waldmann, CEO of Homebase, a payroll software provider for 100K small businesses.

Still, there’s some hope on Main Street. A Constant Contact survey found that 78% of consumers plan to shop at a small business they’ve never visited before to support local businesses this holiday season. And October retail spending was up 0.4%, with September’s numbers revised to a stronger-than-expected 0.8%.

“Ongoing inflationary pressures continue to challenge our Main Streets, but owners remain hopeful as they head toward the holiday season,” says NFIB chief economist Bill Dunkelberg. For businesses like Enjou Chocolat, KOSA Ayurvedic Spa, and Mosaic Collective, the question is whether that optimism and those holiday dollars will be enough to keep them going.