Things that scare small business owners this Halloween.
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With Halloween approaching, small business owners are being spooked by more than just ghouls and goblins this year. Let’s take a look at what currently scares small business owners and how they can overcome their fears.
The Government Shutdown Scares Small Business Owners
It’s a scary time for small businesses that have federal contracts to provide services ranging from landscaping and construction to IT support and marketing services as they are not working during the government shutdown. Construction has halted on new buildings – with the notable exception of firms President Trump has hired to build a White House ballroom – and there is little need for cleaning and maintenance services when offices are not in use. Companies that count federal agencies as their top clients are facing cash flow issues right now.
Meanwhile, businesses including cafes, retailers, dry cleaners, and other service providers that cater to government workers are losing revenue while federal employees remain at home. Along those lines, restaurants and hotels near located near Washington DC museums, including the National Archives and the Smithsonian, the Library of Congress, the National Archives, and the U.S. Capitol have seen their normally steady client base dwindle.
The impact of the shutdown extends beyond the nation’s capital. The National Parks Conservation Association, estimates hotels, restaurants, gear rental businesses and souvenir shops located in communities near national parks across the country could lose up to $80 million in visitor spending each day as the government shutdown continues.
Related: 3 Reasons Why The Government Shutdown Is Hurting Small Businesses
Securing capital is more difficult while the SBA is closed during the federal government shutdown.
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Inability to Gain Access to Capital Scares Small Business Owners
While the Small Business Administration (SBA) remains closed, access to capital has been hindered. For businesses that are struggling due to lost revenue resulting from the shutdown, it’s a double whammy if they needed capital to purchase inventory for the holiday season or hire seasonal help.
According to an SBA press release issued on Oct. 21, each business day the shutdown continues, an estimated 320 small businesses nationwide are unable to access $170 million in SBA-backed commercial loans, translating to $2.5 billion which has been blocked from 4,800 small businesses so far over the course of the shutdown.
Entrepreneurs who planned to invest in the growth of their businesses – whether that meant expanding to boost current operations, opening a new location, or creating new product lines – must now wait for the SBA to resume its normal operations and dig itself out of the inevitable backlog caused by the cessation of work over the past four weeks.
Business owners that are experiencing a cash crunch will try not to invest money or hire more people right now. However, if they need capital in the short term, they may have to look to alternative lenders that will provide funding, but at higher rates than SBA loans or traditional bank term loans.
WASHINGTON, DC —President Trump shows a chart outlining tariff rates imposed on foreign nations during his “Liberation Day” trade announcement in the White House Rose Garden on April 2, 2025.
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Rising Costs Scare Small Business Owners
Although the cost of a gallon of gas has steadily declined since Trump took office, inflation has remained not dropped significantly. The inflation rate reached a low of 2.3% in April, but has risen slowly ever since and is again approaching 3%.
Many small owners cite higher costs of imported goods due to Trump’s tariffs as a cause of financial stress. Some report having to take out loans in order to pay higher than expected levies on items imported from countries that have been slapped with the highest tariffs. Business owners have opted to absorb the costs rather than try to pass them along to consumers for fear that they might not buy at a higher price. Thus, they must choose between lower earnings and the risk of alienating customers. The on-again, off-again negotiations cause uncertainty in the marketplace, which is never good for business.
Across America, fixed costs have not come down from elevated levels. Rents, which rose after the pandemic as property owners tried to recover their losses during COVID, show no signs of dropping significantly. Further, utility costs have skyrocketed in states like New Jersey, and insurance costs for both the businesses themselves and their employee healthcare benefits remain elevated. These are significant liabilities that are putting the squeeze on many profitable companies.
Related: What Trump’s Tariffs Will Mean For Small Businesses
A chef calculates labor costs of running his kitchen.
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The Labor Market Can Scare Small Business Owners
Recruiting, hiring, and keeping staff remains a worry for small business owners. With the current uncertainty in the economy, businesses will try to keep staffing low and remain lean and mean. The minimum wage is $17/hour in the District of Columbia and exceeds $16/hour in Washington State, California, and Connecticut. In New York City, the rate is $16.50, and Democratic candidate for mayor Zohran Mamdani has proposed a $30/hour minimum wage by 2030, if he is elected on Nov. 4.
Cybrercrime is an increasing concern that scares small business owners.
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Cybersecurity Issues and Fraud Scare Small Business Owners
Small businesses are increasingly worried about cyber-attacks, and they should be. A cyber incident can be incredibly disruptive and costly, and in extreme cases can cause bankruptcy. In fact, the National Cyber Security Alliance determined that 60% of small businesses close within six months of a major cyber incident. Further, a data breach can damage a business’s reputation, erode consumer trust, and increase operational costs.
An estimated 43% of all cyberattacks target small and mid-sized businesses, according to Verizon’s Data Breach Investigations Report. Why? Smaller companies often do not have strong security systems because they cannot afford them and do not have the IT people in place to oversee cybersecurity measures. This makes them more vulnerable to hackers than large corporations, which have greater resources to invest in cybersecurity.
Hackers can take over a business’s online ecommerce system and demand ransomware payments and/or data restoration costs. This, of course, is in addition to lost sales that result from the disruption of online transactions.
Business owners must calculate income-expense data to find ways to increase revenue and cut costs.
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Don’t Be Scared, Be Prepared
While the government shutdown is certainly out of small business owners’ control, the experience can inspire them to be prepared for economic challenges in the future. When possible, diversify your revenue base. If your company is overwhelmingly reliant on federal contracts or the patronage of government workers, look for new sources of income via expansion into ecommerce, social media marketing, and other measures to reach new audiences of potential customers.
Business owners who need access to capital right now should look towards sources other than SBA loans. Immediate financing needs can be met by non-bank online lenders that are willing to provide funding to businesses with steady income streams – even if those with limited collateral and/or short credit histories. Merchant cash advance companies will provide a lump sum of money quickly with repayment taken as a percentage of future credit card sales until the loan amount plus interest are repaid. The money is automatically deducted on a daily or weekly basis. Factors typically provide 70–90% of the invoice value of small businesses that have unpaid invoices in exchange for cash immediately.
Small business owners can address rising costs by negotiating with current vendors, searching for better deals from new vendors and using technology to reduce labor costs and streamline operations. Equally importantly, small businesses must enhance cybersecurity measures to guard against outside threats, in the same way that corporations do.
The future does not have to be scary. In fact, it can be quite bright, as long as business owners have the foresight to guard against the challenges and threats we see now.
