Small businesses feel more uneasy ahead of the holidays after a year of slow sales and high costs – WPR

Economic Headwinds for Small Enterprises and Implications for Sustainable Development Goals

Introduction: Small Business Viability and Sustainable Communities

An analysis of small businesses in the American Midwest reveals significant economic challenges that threaten local economies and progress toward several Sustainable Development Goals (SDGs). Enterprises like Simply Nourished Market & Mercantile, which prioritize local sourcing and contribute to sustainable consumption patterns (SDG 12), are experiencing downturns that have broad implications for decent work and economic growth (SDG 8) and the sustainability of local communities (SDG 11).

Challenges to Decent Work and Economic Growth (SDG 8)

Declining Profitability and Business Confidence

Recent data indicates a widespread decline in the financial health of small businesses, directly impacting their ability to provide stable employment and contribute to economic growth. A national survey by Main Street America highlights the severity of the situation:

• 45% of respondents nationally experienced a drop in net profit.
• The figure was more severe in states like Iowa, where 56% of small businesses reported a net profit decrease.
• Business confidence, particularly among enterprises with fewer than three full-time employees, has fallen to its second-lowest level since 2020.

This erosion of profitability and confidence undermines the core tenets of SDG 8, which aims to promote sustained, inclusive, and sustainable economic growth and full and productive employment.

Operational and Economic Pressures

Business owners cite multiple factors contributing to their financial strain. These pressures create an unstable operating environment, making it difficult to maintain decent work conditions and plan for long-term growth.

1. Rising Costs: Owners report significant increases in transportation, delivery, wholesale, and utility costs, which must be passed on to consumers.
2. Tariffs and Supply Chain Issues: Import tariffs have inflated the prices of goods such as olive oil and coffee, disrupting supply chains for businesses that rely on a mix of local and international products.
3. Shifts in Consumer Spending: Economic uncertainty is causing consumers to reduce spending on non-essential goods, leading to decreased foot traffic and sales for retailers.

Impact on Sustainable Cities and Communities (SDG 11)

The Role of Small Businesses in Local Economies

Small, locally-owned businesses are integral to creating resilient and sustainable communities. Their success is directly linked to the vitality of towns and neighborhoods, a key target of SDG 11.

• Economic Multiplier Effect: Independent businesses return more than three times as much money per dollar to their local economy compared to chain stores.
• Local Employment: In rural counties, small businesses account for approximately half of all employment, providing crucial jobs that support local populations (SDG 8, SDG 1).
• Community Engagement: The Main Street America survey found that 70% of small business owners contribute to local causes, supporting community cohesion and social infrastructure.

Threats to Community Resilience

The decline of these businesses poses a direct threat to the social and economic fabric of communities. A challenging economic environment makes it difficult for retiring owners to find buyers, potentially leading to a large-scale loss of essential local services and enterprises over the next decade. This “silver tsunami” of retirements, combined with declining profits, could accelerate the hollowing out of historic downtowns and commercial districts, contrary to the goals of SDG 11.

Responsible Consumption and Production (SDG 12)

Promoting Local and Sustainable Supply Chains

Enterprises such as Simply Nourished Market & Mercantile actively promote responsible production and consumption by prioritizing local and regional goods. The business model is built on:

• Sourcing organic produce and grass-fed lamb from nearby farms.
• Featuring products made in the Midwest, reducing food miles and supporting regional economies.
• Providing specialty options for consumers with specific dietary needs, promoting inclusive access to sustainable food.

These practices align with the objectives of SDG 12 by fostering sustainable food systems and supporting small-scale producers.

Adapting to Market Changes for Survival

In response to declining foot traffic and competition from e-commerce, small businesses are being forced to innovate to maintain their market presence. These adaptations are crucial for survival and continued contribution to local sustainability goals.

1. Expanding Digital Presence: Businesses are moving online, using live-streamed sales events and e-commerce platforms to reach new customers.
2. Diversifying Revenue Streams: Strategies include participating in pop-up markets, co-hosting events, and developing subscription-based models for products.
3. Niche Market Focus: Success is often found by businesses that fill a specific niche and cultivate a loyal local customer base committed to supporting the local economy.

Conclusion: An Integrated Challenge to Sustainable Development

The economic struggles faced by small businesses in the American Midwest represent a significant obstacle to achieving multiple Sustainable Development Goals. The decline in profitability directly threatens SDG 8 (Decent Work and Economic Growth) by jeopardizing jobs and reducing business confidence. This, in turn, weakens the social and economic resilience of local communities, undermining SDG 11 (Sustainable Cities and Communities). Furthermore, the pressures on businesses that champion local sourcing challenge the progress toward SDG 12 (Responsible Consumption and Production). Sustaining these enterprises is therefore not merely an economic issue but a critical component of a holistic strategy for sustainable development in rural and regional areas.

Analysis of Sustainable Development Goals in the Article

1. Which SDGs are addressed or connected to the issues highlighted in the article?

1. SDG 8: Decent Work and Economic Growth
   • The article’s central theme is the economic hardship faced by small business owners in rural America. It discusses declining profits, revenue, and business confidence, which are all directly related to economic growth and the sustainability of decent work provided by these enterprises. The article states that small businesses in rural counties “account for half of the employment,” highlighting their critical role in local economies.
2. SDG 11: Sustainable Cities and Communities
   • The article focuses on the health of local economies in rural areas and small towns like Mason City, Iowa, and Warrensburg, Missouri. It emphasizes the importance of small businesses to community life, noting they “return more than three times as much money per dollar to their local economy” and support local causes. The mention of Main Street America’s efforts to “preserve and revitalize its historic downtown” in Jefferson, Iowa, directly connects to making communities sustainable and resilient.
3. SDG 12: Responsible Consumption and Production
   • The profile of Simply Nourished Market & Mercantile, which is “built upon the backbone of supporting local first” and sells “organic produce and grass-fed lamb from nearby farms,” points to sustainable consumption and production patterns. By prioritizing local and regional supply chains, the business promotes a model that reduces transportation costs and supports local producers, aligning with the principles of responsible consumption.
4. SDG 2: Zero Hunger
   • While not the main focus, the article touches upon sustainable food systems through its description of Simply Nourished Market. The availability of “organic produce and grass-fed lamb” relates to promoting sustainable agriculture and resilient farming practices, which are essential for long-term food security.

2. What specific targets under those SDGs can be identified based on the article’s content?

1. Target 8.3: Promote development-oriented policies that support productive activities, decent job creation, entrepreneurship, creativity and innovation, and encourage the formalization and growth of micro-, small- and medium-sized enterprises.
   • The entire article serves as a case study on the challenges facing small enterprises. It details their struggles with declining profits, rising costs, and competition, underscoring the need for policies and support systems that foster their growth and resilience. The challenges faced by Melissa Fabian and Woods Prael exemplify the exact issues this target aims to address.
2. Target 11.4: Strengthen efforts to protect and safeguard the world’s cultural and natural heritage.
   • The article mentions that the nonprofit Main Street America “supports economic development and revitalization in older and historic downtowns and neighborhood commercial districts.” The specific example of Jefferson, Iowa, being recognized for its “efforts to preserve and revitalize its historic downtown” is a direct illustration of actions toward this target.
3. Target 11.a: Support positive economic, social and environmental links between urban, peri-urban and rural areas by strengthening national and regional development planning.
   • The emphasis on businesses like Simply Nourished Market supporting “a variety of Iowa and Midwest products” highlights the importance of strengthening regional economic links. The article discusses the economic fragility of these rural businesses, which in turn affects the entire community, demonstrating the need for development planning that supports these vital local economic hubs.
4. Target 2.4: By 2030, ensure sustainable food production systems and implement resilient agricultural practices…
   • The description of Simply Nourished Market selling “organic produce and grass-fed lamb from nearby farms” directly relates to this target. The business model supports and provides a market for sustainable agricultural practices within the local food system.

3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?

1. Indicators for SDG 8 (Decent Work and Economic Growth):
   • Profitability of Small Businesses: The article provides specific data from a survey: “45 percent of the nearly 1,300 small business owners who responded experienced a drop in net profit this fall,” and in Iowa, “Fifty-six percent had a net profit decrease.” This is a direct indicator of the economic health of small enterprises.
   • Business Confidence Levels: The article notes that “Businesses that employ fewer than three full-time employees reported the second-lowest average confidence rating since the survey began in 2020.” This qualitative metric can be tracked over time to measure economic sentiment.
   • Sales Revenue Trends: A business owner reported being “anywhere from 15-22 percent lower (in sales) than I was the year before,” providing a quantifiable indicator of business performance.
2. Indicators for SDG 11 (Sustainable Cities and Communities):
   • Economic Contribution to Local Communities: The article states that locally-owned businesses “return more than three times as much money per dollar to their local economy compared to corporate chains.” This multiplier effect is a key indicator of their role in community sustainability.
   • Community Engagement and Support: The finding that “70 percent of the small business owners contributed to local causes” serves as an indicator of the social fabric and resilience of the community, which is supported by local businesses.
   • Investment in Historic Preservation: The example of Jefferson, Iowa, being recognized for its “investment in public art and efforts to preserve and revitalize its historic downtown” is a tangible indicator of progress towards Target 11.4.
3. Indicators for SDG 12 & SDG 2 (Responsible Consumption & Sustainable Agriculture):
   • Availability of Sustainably Sourced Products: The existence and inventory of a store like Simply Nourished Market, which sells “organic produce and grass-fed lamb from nearby farms,” acts as an indicator of the presence and consumer accessibility of sustainable food production within a community.

4. Summary Table of SDGs, Targets, and Indicators

Source: wpr.org