Stock market corrections, tariffs being imposed, and more job openings than ever before are putting unseen pressure on many small and mid-sized business owners. While many people may not understand how these issues impact business funding, they can, and do have an impact across the board for a business owner who is starting up, or one who is attempting to grow their business.
Stock Market Corrections and Financing
Nearly one-third of small business owners use their credit cards to fund business growth. An additional 13 percent borrow money from friends and family to grow their business. The problem is with rising interest rates, and a significant stock market correction, these funds may be costlier, or unavailable.
Rising interest rates have an impact on credit card interest rates, making this a less attractive option. Stock market corrections have an impact on what liquid assets someone has available since uncertainty in the markets tends to lead to more people fleeing to cash positions. This type of uncertainty may also mean more people are unwilling to spend, or invest in businesses owned by family and friends.
Impact of Tariffs May Not Be Immediate
While some businesses may not feel the immediate impact of the newly imposed tariffs on trading partners, there are many who will feel the impact over time. Initially, those who are involved in import/export businesses may feel the crunch which could put them at a disadvantage. Unfortunately, as with many things, the impact will trickle down to other businesses.
While an import business may feel immediate impact from these tariffs, other businesses, including those businesses focusing on storage of items for export, transportation, and production of materials. Since this trickle-down effect will take place over time, these businesses may experience periods of growth and slow-downs which could make traditional financing harder to obtain.
Job Market Impacts all Business
The job market has shown steady growth for more than four years at this time. This is good news for those entering the workforce but may not be such good news for businesses trying to recruit new talent for expansion. Currently, there are more than seven million job openings across the United States according to the U.S. Bureau of Labor reports issued in October 2018. This number bodes well for job seekers but may not be as positive for those businesses who are considering hiring.
More job openings mean there is increased competition among employers who are hiring. This becomes a job searcher’s market which can mean the cost of hiring is going to be higher. Increased competition means employees can seek better pay, better benefits, or a combination of both, putting more financial pressure than ever on small and mid-sized businesses.
Cash on Hand Will Help Fuel Growth
Small and mid-sized businesses who are concerned about the changes in the market including a volatile stock market, a tightening labor market, and increased tariffs should ensure they have cash on hand to ensure they can continue to grow. While this may seem challenging, it is possible to convert your accounts receivable to cash to make sure you are able to take advantage of opportunities which present themselves. For example, a business may accept purchase orders and be able to collect immediate cash against that order.
At Capstone Capital Group, we understand how various external factors can have an impact on your business. Our goal is to help minimize the uncertainty you could face if you need immediate cash to fulfill a contract, enter into a new agreement, or need to hire new staff members. Contact one of our representatives today, call us at (212) 755-3636. Let us help you fund a custom solution to your financial needs.