In Alignable’s most recent SMB report, the company said while business owners are optimistic about this year, many are struggling financially in the post-holiday period — especially minority-owned ones.
Chuck Casto, head of content marketing at Alignable and author of the report, said 42 percent of SMB retailers couldn’t pay their rent on time in January. “Yes, this represents a 4 percentage point improvement over December, but it’s still a high number, especially after what many had hoped would be their best time to recoup monthly losses throughout 2022,” Casto said, adding that, “even worse, this time last year only 33 percent of retailers reported having trouble paying their rent, 9 percentage points better than what’s occurring now.”
Struggling the most are beauty salons, of which 58 percent could not pay January rent. This is up 14 parentage points. Also hit hard are musicians and artists, with 49 percent unable to make rent. And of the independent restaurants polled, 38 percent couldn’t pay rent.
Looking at all of the SMB categories in the rent report, January overall showed improvement. Casto said the good news “is that the overall national average is 10 percentage points down from December’s figure of 40 percent, leaving us with a rate of 30 percent, which was last seen in August 2022. The bad news is that 56 percent of minority business owners say they could not afford to pay January rent in full and on time, up 6 percentage points from December.”
The struggles of minority-owned businesses were largely due “to the ongoing effects of higher-than-average inflation, increasing rents, labor costs and the ever-present issue of having a tougher time getting funding or credit from banks or other sources,” the report stated.
Alignable noted that minority respondents in its monthly rent report have highlighted these issues over the past couple of years, “even during PPP funding, and many say the problems are continuing as the economy tightens and interest rates increase.” It’s noteworthy that the “disparity between the minority-owned businesses and those owned by nonminorities is 24 percentage points this month, Casto said. “To put this in perspective, the difference in December was less than half of that: 11 percentage points.”
The report also found that minority-owned businesses “were the only ones to suffer a setback from December to January, while everyone else benefited from short-term optimism and economic trends.” For all segments, a majority of respondents remain optimistic. In Alignable’s “Road to Recovery Report,” 61 percent expect this year to be a good one for their businesses.