The Landscape for Small Business is Changing

Written By Carolyn Iannone

Small business : Big problems

I have owned and run my small, seasonal business for 15 years. It is a local restaurant open year round but generates all of its annual profits in about 12 weeks in the high season (which is right now.)

The last 5 years have been the hardest.

Some reasons for this are painfully obvious, like, say a global pandemic - which hit the hospitality industry especially hard.

Some are longer lasting- like inflation.

And some are a slower, sneakier burn- like consumers changes in spending habits, changes in diets, eating habits and drinking habits. Especially alcohol, which businesses are seeing a decline of in sales on a national level. Hey, not all consumer habit changes are bad! But it does necessitate a pivot.

Then there are the big, big problems. Like- insurance / housing / the overall unease with the markets which results in overall conservative spending.

It’s daunting. And for a while there around 2022 I really, really thought I was going to give up. I was like, Hi! [hand up in the air] I would like to get off this ride now, please and thank you!

But -I also refused to leave my business worse off than I had found it so I soldered on and while I am back from burn out, the bottom line is still struggling. And I know I am not alone.

This is all happening, in real time, and I know its not just in my little world on the North Fork of Long Island.

We are seeing more hospitality groups and corporate restaurant groups on the scene who have major investors and big budgets. This means they have stronger spending power than the little guys. They can buy real-estate and offer housing to their staff- which they can pool from greater areas because they can afford to relocate them. They have the budget for the latest technology and can outsource easily to third parties, they can higher a team for Human resources, for goodness sake. They can get better rates on insurance policies and benefits. Sometimes they even have electricians and HVAC guys on site.

Here’s the thing. That’s all fine. Really. All boats rise. It’s good to have a healthy mix of big and small businesses. But the landscape is changing and the time for awareness around that is now. It is getting increasingly harder for small businesses to keep up.

Why you should care: because small businesses are always going to have something the big guys don’t. (I mean- some might. And that is awesome.) But most big, big businesses are never going to have the heart like a small business does. Where the owner and the staff work together, like, for real. Side by side. And the relationships formed in a place like that are genuine and real and, at least for me, remind me why we are even out here trying to feed people in the first place. Cause it feeds us.

And its not just about bottom lines and profits and return on investments and making your investors rich. It’s about real people who you know and love and care about.

I also know that small businesses entrepreneurs are savvy and resilient and stubborn AF and they find a way. Even if it’s not exactly what they were picturing, they find a way to make it work. Like- say you start a newsletter helping other small businesses. Or, start a podcast interviewing local small business owners on how they do what they do, or start a consulting business helping small business owners get passed their biggest challenges with one on one set strategies.

Or if you are me, you do all of the above.

Substack: Burn Brightly

Podcast: For the Love of Business

Consulting: Hospitality Within

I also own a restaurant, Love Lane Kitchen.

Cause I love this. For better or for worse- this is what I love and I believe in.

The next time your in a small town or a seasonal place enjoying an ice cream cone or a home made panini or taking a yoga class or getting provisions at a market for your BBQ- ask yourself what that would feel like without the small businesses around. Try to picture it. Everything the same, brands you can get anywhere, everyday.

Where is the heart? I promise you- it’s in small businesses and the world needs them. They are filled with passionate people doing what they love and we need more of that!

Thanks for reading & shine on!

Carolyn

PS

Below is a fun conversation I had with chat GPT

(cause I am not going to pretend I wrote all that cause that is not what I am trying to do here. But I gotta say- it was super useful to me and I think you should check it out.)

Small businesses face a variety of challenges—many of which have grown more intense in recent years due to economic shifts, technological changes, and evolving customer expectations. Here’s a clear overview of the biggest challenges small businesses are dealing with today (2024-2025):

🚀 Financial Pressure

  • Rising costs – Inflation has driven up prices for goods, rent, utilities, insurance, and services.

  • Access to capital – Small businesses often struggle to secure affordable loans or investment, especially in a tighter credit environment.

  • Cash flow management – Irregular revenue, late customer payments, and high upfront costs make balancing cash flow difficult.

👥 Hiring and Retention

  • Labor shortages – Many sectors (e.g., hospitality, retail, trades) have trouble finding reliable, qualified workers.

  • Wage pressures – Businesses must pay higher wages to attract talent, while also balancing slim margins.

  • Employee retention – Workers seek flexibility, better benefits, and positive work culture, which can be hard for small firms to provide at scale.

🏠 Housing and Cost of Living (esp. in certain areas)

  • In places like tourist towns or regions with a high cost of living, employees struggle to find affordable housing, which directly impacts staffing.

🌐 Competition & Customer Expectations

  • Competing with large corporations and online giants – It’s hard to match the convenience, price, and reach of bigger companies.

  • E-commerce shift – Customers expect easy online ordering, delivery, and digital engagement—something many small businesses aren’t set up for.

  • Changing consumer habits – Shoppers are more value-conscious and selective due to economic uncertainty.

🏛 Regulatory and Administrative Burdens

  • Compliance costs – Taxes, health and safety rules, labor laws, and data/privacy regulations are costly and complex to manage.

  • Insurance – Many small businesses report sharp increases in insurance premiums (e.g., liability, property, health).

💻 Technology

  • Keeping up with technology (POS systems, digital marketing, cybersecurity) is expensive and time-consuming, but critical.

  • Vulnerability to cyber threats has increased.

🌎 External Shocks

  • Natural disasters, extreme weather, and global events (e.g., supply chain disruptions, eh hem, pandemics) disproportionately harm small businesses that lack deep reserves.

Here are some of the most recent statistics and insights from reputable business reports (2024–2025) on the biggest challenges facing small businesses:

💰 Financial Stress & Inflation

💳 Access to & Affordability of Capital

  • Among businesses applying for loans/credit, 81% found it difficult to access affordable capital, with 49% halting expansion plans and 41% limiting new business economictimes.indiatimes.com+15goldmansachs.com+15accio.com+15.

  • 53% say they cannot afford taking new loans at current rates, and 88% say lower rates would help chalifourconsulting.com.

  • Over 35% applied for new credit last year; 80% of those applicants report difficulty securing affordable funds .

👥 Hiring & Talent Retention

🛒 Customer Acquisition & Revenue Growth

📋 Regulatory & Compliance Burdens

  • 40% of firms increased time/resources on compliance in Q2 2025, up notably quarter-over-quarter uschamber.com.

  • Globally (e.g. Indian MSMEs) small businesses may face over 1,450 regulations per year, costing ~$13–17 lakh annually timesofindia.indiatimes.com.

  • In the U.S., 75% say the federal tax code unfairly burdens them; 70% cite tax compliance costs as high goldmansachs.com.

📦 Supply Chain & Cash Flow

📊 Summary Snapshot

Challenge Area

Key Stat(s)

Inflation

58% cite; 58% record high concern

Rising Costs

75% flagship burden; 56% struggle to pay operating costs

Access to Capital

81% find affordable financing difficult; 53% can't afford debt

Hiring & Retention

89% hiring firms struggle; 33% lose staff over benefits

Customer Acquisition

57% struggle to reach new customers

Regulation/Compliance

40% increased compliance burden

Cash Flow

29% cite as top issue; 74% can only cover 1 month’s expenses

✅ What Does This Mean?

Small businesses today are navigating a perfect storm: soaring costs, strained access to capital, fierce competition for talent, difficulty reaching customers, and mounting regulatory pressure. It’s no surprise that nearly nine in 10 report facing challenges across multiple fronts.

Let me know if you’d like deeper dive insights, or strategies to counter specific issues like inflation, access to capital, or hiring hurdles.

Recent small‑biz reports & surveys

reuters.com

UK employers group says tax hike has hit hiring hard

6 days ago

timesofindia.indiatimes.com

MSMEs burdened by high compliance costs; face over 1,450 regulations annually: Report

3 days ago

economictimes.indiatimes.com

71% of Indian SMEs sought external funding in 2024: CPA Australia Survey

May 13, 2025

Sources

So what are the solutions?

There are some! Here are some practical, realistic set of strategies small businesses can use to address today’s most common challenges. I’ve organized them by problem area, with ideas that work even when resources are tight:

💰 Rising Costs / Inflation

✅ Reassess pricing — Review your pricing regularly. Small, incremental increases are easier for customers to absorb than big hikes. Consider value-based pricing rather than just cost-plus.

✅ Trim waste — Audit expenses: subscriptions, utilities, insurance, vendors. Negotiate better terms. Cut anything that doesn’t contribute to revenue or customer value.

✅ Join buying groups or co-ops — Pool purchasing power with other small businesses for better rates on goods and services.

✅ Diversify suppliers — Don’t rely too heavily on one vendor; spread risk and seek competitive quotes.

👥 Hiring & Retention

✅ Focus on culture and flexibility — Small businesses can’t always match big-company wages, but they can offer flexibility, respect, purpose, and growth opportunities. These matter deeply to today’s workers.

✅ Offer non-cash perks — Think creative: staff meals, flexible schedules, 4-day weeks, training, wellness stipends.

✅ Cross-train your team — Build a team that can cover multiple functions, reducing your risk when short-staffed.

✅ Partner with local schools or training programs — Internships or apprenticeships can build your pipeline.

💳 Access to Capital

✅ Strengthen your books — Lenders want to see reliable financials. Keep up-to-date P&Ls, balance sheets, and cash flow statements.

✅ Tap alternative funding — Look beyond banks: CDFIs (Community Development Financial Institutions), credit unions, local grants, revenue-based financing, crowdfunding, peer lenders.

✅ Prepare before you need money — Build relationships with lenders and apply for credit lines when business is stable.

🛒 Customer Acquisition & Sales Growth

✅ Invest in digital presence — Even basic improvements (Google Business Profile, social media activity, online ordering, email list) can expand your reach.

✅ Leverage loyal customers — Run referral programs, loyalty rewards, and ask for reviews/testimonials.

✅ Collaborate with other businesses — Co-promotions, pop-ups, bundled offers help you tap into new audiences.

✅ Focus on retention — It’s 5-7x cheaper to keep a customer than gain a new one. Personalized service, follow-ups, and consistency go a long way.

📋 Regulatory & Compliance Burden

✅ Outsource selectively — Consider a bookkeeper, payroll service, or HR/payroll software to reduce time on admin.

✅ Stay proactive — Subscribe to small business advocacy groups or your local chamber to stay ahead of new rules.

✅ Document processes — Clear internal policies and documentation can help avoid accidental non-compliance.

💡 Cash Flow Management

✅ Shorten receivables — Encourage faster payments through discounts for early pay or requiring deposits.

✅ Stagger payables — Negotiate longer terms with vendors where possible.

✅ Use cash flow forecasting — Even a simple spreadsheet showing expected inflows/outflows helps you plan ahead.

🌐 Tech & Process Efficiency

✅ Automate low-value tasks — Use affordable tools for scheduling, invoicing, inventory tracking, marketing (e.g., Mailchimp, Square, QuickBooks).

✅ Invest small, steady — Instead of big tech overhauls, add or upgrade small systems where you’ll see the biggest return first.

🚀 General Mindset

✅ Don’t go it alone — Join local or industry networks. You’ll find peer support, shared resources, and potential partnerships.

✅ Be nimble — The most resilient small businesses stay close to their customers, pivot when needed, and constantly fine-tune operations.

🍽 Biggest Challenges for Restaurants Today (2024–2025)

💰 Rising Costs (Ingredients, Rent, Insurance, Utilities)

▶ Food costs: Wholesale food prices are up 5–12% year-over-year in 2024 (especially proteins, dairy, and imported goods).
▶ Insurance premiums: Up 15–25% in many regions, especially liability and property insurance.
▶ Rent: Many restaurateurs face rent increases 10%+, especially in urban/tourist areas.

👥 Labor Shortages & Retention

▶ Nearly 60% of restaurants report they’re understaffed.
▶ Turnover remains high: hospitality turnover rate ~75%, compared to ~50% pre-pandemic.
▶ Competition: Large chains offer higher wages/benefits that independents struggle to match.

🛒 Customer Expectations & Sales Volatility

▶ Diners spending less per visit — customers are trading down (fewer apps, more water vs drinks, skipping dessert).
▶ Takeout/delivery demand still strong, but costs (commissions, packaging) erode margins.
▶ Foot traffic is inconsistent; many markets see 5–10% fewer covers than 2019 levels on average weeknights.

💳 Access to Capital

▶ Many independents find it harder to secure affordable loans; over 70% report borrowing is harder today vs 3 years ago.
▶ Credit card fees (processing fees) are a growing pain point — sometimes 2.5–4% of every dollar.

📋 Regulatory & Compliance Pressures

▶ Minimum wage increases and changing tip credit laws in many states.
▶ Growing burden of health/safety regulations, especially post-pandemic.
▶ Sustainability demands (plastics bans, composting requirements) add cost/complexity.

🚀 Restaurant-Specific Solutions & Strategies

💡 Cost Control

✅ Engineer your menu:

  • Highlight high-margin items (pasta, poultry, veg-focused dishes)

  • Reduce menu size to lower inventory waste

  • Seasonal menus tied to cheaper, local products

✅ Lock in pricing: Build relationships with key suppliers; negotiate fixed prices where possible.

✅ Portion smart: Adjust portions slightly where appropriate — diners rarely notice small tweaks in protein weight if plate composition stays satisfying.

✅ Energy savings: Shift to energy-efficient bulbs/equipment (often available with rebates); train staff to power down equipment during lulls.

👥 Labor Strategies

✅ Cross-train staff: Create flexible, multi-role positions — servers who can host; cooks who can run expo.

✅ Culture wins: Focus on work-life balance, respectful leadership, and employee recognition — big drivers of retention that don’t cost much.

✅ Non-cash perks: Free meals, flexible scheduling, 4-day weeks where feasible.

✅ Tap alternative pools: Partner with culinary schools, re-entry programs, or senior workers seeking part-time jobs.

📈 Boosting Revenue

✅ Lean into takeout/delivery — but smartly:

  • Encourage direct orders via your site to avoid 3rd party fees

  • Offer family meals / bundles that travel well

✅ Upsell & train servers: Create simple prompts for staff to suggest higher-margin items (e.g. “Would you like to add grilled shrimp to your salad?”)

✅ Loyalty programs: Simple stamp cards, email rewards, or text clubs can keep guests coming back.

✅ Events and partnerships: Host pop-ups, collabs with breweries, local farms, or musicians to drive traffic on slower nights.

💳 Financial & Admin Tactics

✅ Shop processors: Re-bid your credit card processing; small savings add up fast.

✅ Grants / alternative funding: Many cities, states, and nonprofits offer small grants or loans for restaurants — worth researching.

✅ Pre-sell experiences: Sell gift cards, pre-paid dining packages, or chef’s table nights for upfront cash.

📋 Compliance Made Easier

✅ Join restaurant associations (NRA, state/local groups) to stay on top of rule changes + access advocacy support.

✅ Document policies clearly (tip pools, allergens, safety) so everyone knows the playbook — this reduces risk.

✅ Use affordable payroll/HR tools (e.g. Gusto, Homebase) to stay compliant without spending big on admin.

🌟 Key Mindset

Restaurants that are nimble, transparent with teams, and laser-focused on guest experience continue to outperform — even in tough times. Small changes (tight menu, strong culture, digital smarts) can compound into real resilience.

Carolyn Iannone
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