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RICHMOND, Va. — Small businesses booming during the pandemic are now closer to going bust. A report from the U.S. Chamber of Commerce points to inflation and access to capital as contributing factors.
“Cutting expenses is what’s really the key to surviving right now,” says Kathi McCausland, owner of Bella Cuttery, a business she started 10 years ago personalizing gifts.
A viral TikTok video helped McCausland sell more than 20,000 custom pencils in 2023, but she says that isn’t a sustainable business model – especially in an economy where business costs are rising in less visible ways.
“It’s all the overhead business costs that have gone up a lot. The postage, customer acquisition, marketing, all of that stuff,” said McCausland.
McCausland says sales across multiple selling platforms, including Amazon, Etsy, and her website are down in 2023 following a spike during the COVID lockdowns.
“We pivoted. We made new things that people were buying. People weren’t going out and spending money on normal things, so they had more discretionary money to spend,” said McCausland. “I feel like this is the year that we have felt the reality come back.”
Another Midlothian small business, Latched Mama, reports very similar trends.
“Sales in 2020 and 2021 were amazing. We were up 35 percent,” said founder Melissa Wirt.
The maternity clothing company Writ started after realizing how difficult it was to breastfeed her second child cleared 8-figure revenues in the first years of the pandemic but struggled to maintain that pace since.
“Personally, I held on for super long. And I was like, ‘We don’t have to constrict. We don’t have to constrict. We can do it.’ But it got to the point where we did,” said Wirt, who currently employs about two dozen people who are welcome to bring their babies to work.
Both businesswomen point to the rapidly rising costs associated with online marketing as a big factor in their bottom lines.
“The way you learn if marketing works is you have to test it, and it takes money to play that game. Most small businesses are constantly juggling cash. Most of us are not funded. Most of us have to watch the revenue come in, and then figure out where it goes,” said Wirt.
Wirt says the birth of influencers has created a Wild West in e-commerce marketing where there are few established norms for how much exposure is worth.
“Advertising on Facebook, and everywhere has completely changed with new privacy laws too. Those are great and wonderful, but we now have to pivot and try and figure it out,” said Wirt, who calls 2023 a learning curve.
For many small businesses, the holiday shopping season is critical to their future success. Fortunately, it is also easier than ever to shop small with many websites like Amazon adding filters for small businesses. Another way to support small companies is to shop directly from their websites where fees are smaller than the larger platforms.
What’s your favorite local small business? Add their name to our growing list on the WTVR CBS 6 Facebook page.
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