Small business owners’ ability to ‘manage workforce, retain employees’ now is critical: SBA admin

U.S. Small Business Administration (SBA) Administrator Isabella Casillas Guzman joins Yahoo Finance Live to speak about the resiliency of small businesses across America and how they can navigate the nationwide labor shortage.

Video transcript

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- Welcome to "Yahoo Finance's" spotlight on small business. Small businesses are the backbone of the American economy. These are the businesses that are owned by our neighbors. They line our streets and contribute to our communities.

To give you an idea of how popular small businesses are, a recent Gallup poll found that small business to be the most trusted institution in the US. So that's why, over the next hour, we are going to discuss the issues that small business owners are struggling with as well as the strategies that they are using to succeed.

- A lot to get to. The US consensus accounts 32 and 1/2 million small businesses in the US. That represents the heartbeat of our economy. Though many are thriving out of the pandemic, numerous challenges await, including higher interest rates, the labor shortage, supply chains, regulations, access to capital, just to mention a few.

Isabella Casillas Guzman is tasked with removing those impediments, or doing her best to do so. She's the US Small Business Administration administrator. Great to have you here. We hope to address all those issues. But when you talk to business owners across the country, what is their single biggest concern today?

ISABELLA CASILLAS GUZMAN: Well, our small businesses have been remarkable and resilient and have really helped to spur that recovery, the historic economic recovery that we've seen in the Biden-Harris administration. But across the nation, no matter what industry, they continue with that grit and resilience and hope for the future. They're about creating their dream of business ownership.

And so, obviously, the challenges in the marketplace that they've been navigating since the pandemic began persist. And a lot of times, it's finding the right employees and retaining those employees or dealing with supply chain disruptions, trying to pivot their models so they can keep on serving their customers, which is what we all rely on them to do.

And so they've obviously needed that extra support. And that's what the SBA is all about is making sure they get the funding that they need to grow their businesses as well as the resources to figure out how to improve operations or expand their revenue base.

- Yeah, Isabella, speaking of funding, PPP was largely successful when you take a look at the fact of how many businesses, small businesses, the PPP loans helped. $755 billion were loaned out to 11 and 1/2 million businesses nationwide, helping to retain 86 million jobs. When you take a look at the funding that's needed today, how much improvement have we seen since we hopefully have turned the corner on the pandemic?

- Well, PPP was a lifesaver for our businesses. And as they continue to try to navigate the pandemic, those extra relief funds through the American Rescue Plan were really critical to helping especially the smallest of the small, which is what we've focused on in the Biden-Harris administration is helping those who may have been shut out of early relief get that capital.

You know, they've had to sustain quite a bit in terms of the length of time dealing with this disruption. But, you know, our small businesses, we are trying to create those pathways to capital if they need it. And if they were able to access grants locally or other support, that's been really critical to helping them carry through.

But since it's the holiday season, I'd be remiss to say that, really, small businesses across Main Streets are really dependent on a strong holiday season. So as we think about spending our holiday dollars and shopping this season, thinking of our small businesses, who have local employees and benefit the local economies, you know, is really where we should be spending our dollars.

- Indeed. It is difficult out there. And we mentioned a couple of these issues. If we could drill down a little bit on the two biggest factors I'm hearing from small businesses, one, that higher interest rate environment, and inflation. How are they impacting our small businesses across the country?

ISABELLA CASILLAS GUZMAN: Well, you know, just starting with inflation-- obviously, tracking that there's been some moderation. And so small businesses have had to, in many cases, you know, pivot in their product mix to be able to still offer competitive prices to their consumers. They've had to figure out how to increase prices and at what time and how to continue to market and support maintaining their revenue base despite price increases.

And so it's been a challenge. And I think what we've positioned to do is help businesses manage to that bottom line. We have over 1,600 centers across the country who are helping small businesses with free advice to figure out some of those daily challenges that they might be dealing with with inflationary pressures or supply chain disruption.

I think that the interest rate environment-- obviously, we're continuing to see strong demand for SBAs' products. We offer affordable loans to small businesses in both fixed and variable rates. And so with small businesses needing capital to maybe leverage opportunities on the horizon with those historic investments in infrastructure or the future energy of America, I think that's where small businesses need to make sure they're exploring all their options, finding lenders, including those who work with the SBA products, to get the capital that they need to grow their businesses.

- Isabella, you mentioned labor shortage as being one of the issues that's facing small businesses these days. There was a recent ADP survey finding that 52%-- over half-- of small business owners say the biggest challenge right now is finding qualified job candidates. It's a tough competition out there when you take into account the wages that workers are demanding today. How can small businesses better position themselves in order to attract that top talent?

- Well, first and foremost, I think that, you know, within our small business development centers, our women's business centers, our SCORE mentors, and our veterans centers, we try to provide that support, connecting small businesses to the workforce development resources that are available to them so they can find talents and take advantage of any special programs to help them retain those employees as well.

You know, I think that now, more than ever, their ability to manage workforce, to create a culture and environment to retain employees is critical. And so that strategic advice around, you know, HR challenges, benefits that can be offered, are things that we offer through our advisory network. We want to make sure that small businesses have access to all the technologies as well as the strategies and that they can compete with large firms for those small-- for those employees around their communities.

And honestly, as a result of PPP, so many small businesses were able to retain their employees. I also speak with so many business owners who have built up strong loyalty. They are like families, in many cases, amongst their employees. And so those types of culture differentiators is really what helps small businesses grow and retain their employees.