With more than half the year behind us and the coronavirus pandemic growing smaller in the rear view window, businesses have shifted their focus from weathering the storm to finding their footing in a new landscape.
Getting back to normal isn’t necessarily an easy transition. The emergence from the pandemic has brought with it a new set of challenges, making adapting to the “new normal” harder.
“This is an unprecedented economic time coming off an unprecedented pandemic experience that’s about to be meshed into significant tax law changes. All of those moving parts make it hard to project future operations,” says Frank Turocy, principal at HBK CPAs & Consultants in Canfield.
Turocy and other business advisers throughout the area point primarily to two factors that are giving companies pause as they try to work back to a sense of normality: labor shortages and the rising cost of doing business.
Throughout his career, Farmers National Bank’s Tim Shaffer says, finding qualified workers has always been one of his clients’ top concerns.
“They’re absolutely exasperated because they can’t find people,” says the bank’s chief credit officer. “They said it was because of the extra unemployment but now that’s ended in Ohio. I think the difference is there are qualified people who’ve historically gone to work who are opting not to work there any more. The most common problem still exists; it’s just amplified.”
When workers can be found, Turocy says, wages are rising across the board and giving business leaders another factor to be concerned with as they monitor their cash flows.
“Employees are hard to come by. A lot of companies are having labor shortages and employees are becoming more expensive,” Turocy says.
“We’re seeing it across the board: lower-wage positions, skilled labor positions, office positions, administrative positions. Everything seems to be increasing in regards to what it costs to have employees at each of those levels,” he says.
And throughout the national economy, prices are rising. In June, the Labor Department reported the highest monthly increase in consumer prices, 5%, in 13 years.
Although prices have settled somewhat, at one point lumber was up 200% year-over-year. Steel prices are up 16% since the start of the year. In the face of a global shortage of microchips, technology manufacturers like HP and Asus are increasing their prices as the shortage is expected to stretch into next year and possibly further.
And the country’s oil-price benchmark, West Texas Intermediate, hit $76.98 per barrel in early July, the highest level in six years.
For businesses already strained by the toll of the pandemic, it can be a perfect storm.
“We see that some are still holding onto their cash because they don’t know what’s going to happen next. For some, we work on restructuring their financing,” says Teresa Miller, executive director of Valley Economic Development Partners.
After doing “an astronomical amount” of Paycheck Protection Program loans earlier this year, Valley Economic Development Partners is now looking at how it can help businesses regain their footing, including the launch of new lending programs and continuing aid offered last year.
“We reached out to grasp any opportunity we had to create new products that would help businesses emerge from any financial suffering they may have,” Miller says. “To our existing clients, we’re continuing much of the same things we did in 2020. Most of our loan clients have recovered and are back on track. With us not being a bank, we’re able to offer a lot more leniency and push their maturity out and offer deferments.”
At Mercer County Community Federal Credit Union, CEO Sandi Carangi says, the focus is on improving its technological offerings.
During the pandemic, the credit union saw the use of its web and mobile services double, which in turn led to the implementation of a new core processing system that’s set to launch August 1.
Mercer County FCU also partnered with NewTek Business Services to provide its business clients – primarily sole proprietors and DBA accounts, Carangi says – with the tools they need.
“During the pandemic, we saw those businesses coming to us and saying that they needed help, whether with PPP loans or other financial needs,” she says. “We partnered with Newtek Business Solutions. We can handle their personal accounts and, for the couple hundred businesses we serve, help them there.”
The credit union is also continuing its pandemic relief offerings such as deferments.
“Now that everyone has their PPP, what people are asking for as we get back into the swing of things is a continuation of that,” Carangi says. “It’s not unheard of for a month to take a toll and for a business leader to need some time to get back on their feet. We handle that case by case.”
As businesses work to navigate an economic landscape that’s both familiar and unprecedented, the advisers all say that now is the time to turn to professionals as needs arise.
Mercer County FCU has certified financial counselors on staff, Carangi says, and counterparts at Farmers National Bank, Valley Development Partners and HBK are also available. The pandemic may be winding down but that doesn’t mean more problems won’t arise.
“Trying to do it on your own is a hard thing to do,” Farmers’ Turocy says. “Get with your professional advisers. Listen to their advice and get the best information you can in front of you to make the best decision you can.”
Pictured: At Mercer County Community Federal Credit Union, the focus is on improving its technological offerings.