Small businesses are bearing the brunt of supply-chain pressures and rising prices, with many tapping their cash reserves or taking on debt just to compete with larger rivals, the Wall Street Journal reported. Most smaller firms don’t have the heft and sophistication to thrive in an environment of booming demand and short supply — the same forces that many of America’s biggest companies have been able to ride to higher earnings. High inflation, a tight labor market, stressed supply chains and dwindling liquidity are straining many small businesses, exacerbating the existing power imbalance between small and big firms. It all deepens the challenges that small companies have faced since the onset of the COVID-19 pandemic. And stresses will mount for those that take on more debt as the Federal Reserve raises interest rates. Many large corporations have used their scale to successfully navigate the twin threats of supply-chain disruptions and rising prices, with some reporting 2021 sales and profits exceeding 2019 levels. Small-business owners — those who serve consumers and those that sell to other businesses — say demand remains strong. But they face a longer-term impact on sales if their businesses cede customers to larger rivals with the resources to serve them. Two-thirds of small businesses impacted by supply-chain constraints said suppliers are favoring large businesses because of the volume of orders, according to a recent Goldman Sachs survey of more than 1,400 businesses. Eighty-four percent of small businesses said inflationary pressures had worsened since September, according to the Goldman survey, with more than three-quarters reporting that inflation had hurt their business’s financial health.
