It seems like everyone is getting hit in the wallet these days, but that’s especially true for small businesses who rely on tourists who, after trying weather COVID for two years, are still struggling to hire while the price of everything continues to rise.
Tourism is a huge part of the Rhode Island economy engine, generating $1.3 billion but for local, small businesses juggling closures and staffing issues are asking for help.
Brian Fitzgerald, who owns and operates the Admiral Fitzroy Inn in Newport. Fitzgerald is one of the 91% of small business owners who said broader economic trends, such as inflation, supply-chain issues and workforce challenges are having a negative impact on their business. Small businesses across the country are feeling the pinch in the wake of higher prices (for everything) and a highly competitive hiring market left, according to new survey data of small business owners from Goldman Sachs 10,000 Small Businesses Voices.
The survey polled 1,107 Goldman Sachs 10,000 Small Businesses participants conducted by Babson College and David Binder Research from April 11-14. Of those, 88% said inflationary pressures on their business have increased since January 2022, 80% said supply chain challenges worsened or stayed the same and 88% said hiring challenges worsened or stayed the same.
Fitzgerald said he's hopeful change will come via the reauthorization of the Small Business Administration for the first time in 22 years. Fitzgerald said he's focused on how the government can help us access capital, support our staff, and win government contracts.
The Small Business Administration budget request for fiscal year 2023 includes money that could aid small business owners who are seeking training and counseling, or access to funding. The proposal also increases the SBAs lending authority by $6.5 billion.
Fitzgerald bought the Admiral Fitzroy Inn, a small boutique hotel located in the heart of Newport, about 15 years ago. The historic building was previously the home of the convent for the sisters of St. Mary’s Church until a local entrepreneur moved the building in 1986 to its current location on Thames Street.
Between hiring, inflation and supply-chain issues, Fitzgerald said the inflation has had the biggest impact. To retain employees in this economy, he's had to raise compensation and benefits packages.
"It’s been really challenging to do that while shielding the consumer from price hikes. And on top of that, access to capital remains a huge issue with my PPP and EIDL loans nearly gone," he said.
Fitzgerald said as a small-business owner, he wants to be in a position to offer retirement plans.
"We also want the employee retention credit to be renewed, and we urgently need more opportunities to access capital. There are also initiatives that can also be taken on by our local leadership at the municipal and state levels," he said.
In Newport, when Fitzgerald finally saw the return of tourists after the first year of the pandemic, he said they didn’t have enough staff to accommodate the demand. Running at about one-third staff capacity last summer, they left revenue on the table.
"We couldn’t compete with other benefit and employment packages and as a result we lost employees," he said.
Currently, the Admiral Fitzroy Inn is hiring for the summer season now and Fitzgerald said he still doesn’t see a lot of applicants applying.
“Policymakers have already done so much to help small businesses make it through the worst parts of the pandemic," he said. "Now, as we continue to rebuild our economy, it’s critical that we take steps to tailor government programs and services to meet the needs of today’s small businesses and the challenges we face.”
According to the survey, 42% reporting they have lost employees to larger businesses that are paying more, 65% of businesses affected by supply chain challenges saying it is a problem for their business that suppliers are favoring large businesses over small businesses and 70% worry about employees leaving their businesses because larger businesses can offer higher pay and more generous benefits.
An earlier version of this article included misattributed information and quoted material. Brian Fitzgerald is owner and operator of the Admiral Fitzroy Inn in Newport.
