Small Business Owners Face an ‘Incredible Challenge’ to Stay Open: ‘It’s Been a Nightmare’

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. 

Economic obstacles impact small business revenue

Jovaag said that he enjoyed exercising his creativity to redesign kitchens, bathrooms and other parts of a home. Throughout his career, he created significant long-term relationships with clients. However, he has faced many challenges since the Covid-19 pandemic, which have diminished the joy he gets from his work. 

Some obstacles include high mortgage rates, which froze much of the housing market and discouraged homeowners from taking on remodeling projects. At the same time, tariffs drove up prices for plywood and other key supplies, pushing project costs even higher. Under those circumstances, Jovaag’s revenue, which can reach about $1 million in a strong year, fell by nearly 25%. 

He received a $3,000 tax refund this year, but it barely made a dent in the $10,000 he pulled from his savings last year just to keep the business going. Rising gas prices have also cut into his earnings by making every drive to a job site more expensive. 

“It’s been a nightmare,” Jovaag, who is 68 years old, told the Times. “I’m ready to retire.”

Despite this strain, there are signs of resilience in the data. The Bank of America Institute reports that a majority of business owners still expect revenue to rise over the next year, even as they acknowledge tighter margins and uncertain costs.