Businesses have been hit with a continuous stream of challenges since the beginning of the COVID-19 pandemic. While life has mostly returned to some semblance of normalcy, many U.S. businesses are still dealing with supply chain issues, staffing shortages, inflation, and looming recession fears. Some industries have been hit harder, but overall, an estimated 37% of small and medium businesses cannot pay their rent.
To identify the industries that cannot afford to pay their rent, 24/7 Wall St. reviewed Alignable’s report, Record Surge In Rent Delinquency: Up 7% In October, Totaling 37% For U.S. SMBs. The report listed industry rent delinquency rates for small and midsize businesses for each month of 2022 so far. Alignable based its rent delinquency estimates on a survey of 4,789 randomly selected businesses from Oct. 15, 2022 to Oct. 27, 2022.
Businesses are facing a variety of economic problems, some of which hit certain industries hard. During the height of the pandemic there was a large expansion of the at-home economy — people cooked, cut their hair, and worked out at home. As inflation continues to erode consumer purchasing power and recession looms, many people have already returned to these cheaper at-home alternatives, hurting businesses again. (Fight inflation, don’t buy these 9 items.)
Further, inflation and supply chain problems make doing business more difficult for almost every industry. These problems have been created by a myriad of problems, including the war in Ukraine and the “zero-COVID” policy in China.
Russia’s invasion of Ukraine has caused shortages in fuel, grain, fertilizer and more, driving up prices and creating issues for businesses that use them. China’s “zero-COVID” policy has put major factories and trading centers in the country on total lockdown, creating stark and unpredictable supply shortages. Many manufacturers require special parts that are produced in China. Delays can increase costs and result in the loss of customers.
Inflation is also driving up the cost of rent for businesses. An estimated 51% of small and midsize businesses surveyed reported a rent increase. And while some businesses have reported growing sales, the effects of inflation have absorbed much of their gains in sales. (Here’s what’s getting more expensive at stores in America)
All these factors have created a storm that is hitting some industries particularly hard.
Click here to see the industries with the most struggling small business owners.
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