BCH’s AMEN Corner – Affluent Minority Entrepreneur News

In 2024, small business owners experienced higher sales revenue than the previous two years. Despite inflation, consumer spending was higher. While enjoying higher sales, they faced an array of challenges and opportunities as they navigated economic turbulence, labor market pressures, and technological advancements. For diverse owners, the persistent hurdles in accessing capital and resources remained, further complicated by broader economic forces. This article serves as a reflection point for the highlights, key moments and strategies that defined the year, examines their impact on the diverse small business community, and offers projections for the way forward.

Higher Sales –

During 2024, consumer spending remained robust despite inflation and economic challenges. As a result, revenues were higher in 2024 for small businesses compared to the previous fiscal cycle. During Q3 of 2024, optimism was highest among small business owners as interest rates lowered, inflation eased and cash flow improved. Both the National Federation of Independent Business (NFIB) and U.S. Chamber of Commerce have reported that business sentiment has rebounded this year to its highest level in about two years.

Economic Challenges and Inflation –

Inflation in 2024 posed a significant threat to small businesses, with 38 percent of owners citing it as their biggest risk, surpassing concerns about consumer demand and interest rates. Rising costs for raw materials, energy, and wages forced businesses to choose between raising prices and risking customer attrition or absorbing costs at the expense of profit margins. As reported by the U.S. Department of the Treasury, in 2024, there was a decrease in these pressures from 2023 where the average was 4.1 percent compared to 2.7 percent November 2024. Listed are some key strategies small business owners used to combat inflation.

• Cost Management: Streamlining operations, reducing waste and increasing efficiency.
• Diversifying Suppliers: Building resilience against price fluctuations.
• Leveraging Technology: Using digital tools to improve productivity and reduce operational costs.
• Exceptional Customer Experiences: Offering high value to accompany price increases.
• Financial Planning: Maintaining strong cash reserves to weather economic fluctuations.

Interest Rates and Access to Capital –

The Federal Reserve’s decision to cut interest rates was welcomed and provided a sigh of relief for small businesses. However, many remained cautious when it came to borrowing money, with 60 percent avoiding borrowing due to previously high rates. Interest rates on short-term loans peaked at 9.5 percent in August, up from 7.6 percent in January 2023 as reported by the US Chamber of Commerce, further compounding the challenges diverse small business owners face with access to capital. The reduced rates did spark optimism, allowing businesses to plan for growth with greater confidence.

Generative AI –

Opportunities and Risks Generative AI emerged as a game-changer for small businesses, enabling improvements in operations, customer experiences, and competitive positioning. However, the adoption of AI brought risks, including:

• Data Security and Privacy Concerns
• Risks of Plagiarism, Misinformation, and Harmful Content

To mitigate these risks, businesses prioritized data governance, establishing clear policies and cybersecurity measures. They also aligned strategic implementation of AI initiatives with business objectives to enhance value without compromising integrity. The use of AI proved to be beneficial to small businesses in 2024.

Labor Market Pressures and Employee Retention –

In a competitive labor market, diverse small businesses continued to face hiring challenges:

• 52 percent reported being understaffed.
• 77 percent struggled with a competitive hiring landscape.
• 65 percent found it difficult to increase salaries in line with inflation.

To combat these trends, owners took proactive measures to attract and retain employees that include: flexible work arrangements (83 percent of businesses offered flexible hours to support work-life balance), intentional onboarding processes (setting a positive tone and long-term outlook for new hires), promotions and development (investing in career growth and internal mobility), competitive pay and perks (regularly reviewing compensation packages to stay competitive), employee recognition (highlighting individual contributions to boost morale) and Diversity, Equity, and Inclusion (creating an inclusive and equitable work environment).

These strategies helped businesses navigate labor shortages while fostering loyalty and engagement among employees.

Policy and Regulatory Landscape –

Small businesses in 2024 also had to navigate evolving regulations, including:

• Beneficial ownership reporting.
• Cryptocurrency and digital asset laws.
• Environmental, social, and governance (ESG) compliance.
• Data privacy laws.

These shifts required owners to stay informed and adapt swiftly to maintain compliance while pursuing growth opportunities.

Way Forward: Things to Watch in 2025 –

Looking ahead, small business owners can build on 2024’s momentum, successes and challenges by strategically using capital to enhance technology, strengthen financial planning, prioritize employee well-being and development, foster a resilient workforce and stay vigilant about regulatory changes. The new administration is coming in with new policies which, by all indications, favors businesses. 

• Based on the market bump after the election, consumer confidence and Wall Street’s outlook on the economy should continue to be strong.
• Efforts will be made to decrease costs which could impact your cost of goods sold. However, policies such as increasing tariffs can increase the cost of goods and services.
• Look for interest rates to continue to decline. Cheaper money will present the opportunity to access capital for less.  
• Federal tax rates are subject to decline if passed by Congress over the next few years. This could free up lots of cash to take care of business priorities.
• AI is only going to improve while becoming even more efficient. Use it to improve operations and to lower costs over time. Don’t get left behind. Be intentional and purposeful with your decisions to expand AI.
• The labor market will continue to be competitive. However, it is cyclical like everything else market related. Keep searching for the right employees and show them that you value their contributions to your mission. Also, focus your pitch on the total compensation package and not just the salary.  
• An emphasis for the new administration will be to loosen the regulatory oversite. Stay on top of any changes that may impact your business.

While challenges will always persist, the adaptability demonstrated by diverse small business owners over the many decades into 2024 strongly positions them for sustainable growth in 2025.

On behalf of BCH, we have enjoyed sharing lots of info and strategies with you this year and look forward to a profitable, prosperous, and blessed 2025. Happy Holidays!

—Carey Evans also contributed to this article.