That figure has risen 5% since April, and the situation’s even worse in Canada, where 39% of SMBs couldn’t make rent. What’s driving the crisis? Some of the survey’s results suggest the culprit is a wave of rent hikes across the board, paired with outside factors including supply issues and growing gas costs.
Small and Mid-Size Businesses Can’t Make Rent
The new data comes from small business networking site Alignable, which released its Q2 Rent Report at the start of the month. The data shows that the reason why businesses can’t make rent isn’t that the businesses are earning less: It’s because the rent has simply become too darn high. Or, to put it in more clinical terms, 52% of all SMBs polled have dealt with a rent increase within the past six months. Within that majority of businesses, 18% self-report a rent raise of between 10% and 20%, while another 14% report a rent raise of more than 20% from what they were paying just six months earlier.
Surviving as a Small Business
The business outlook is grim in 2022 even without exorbitant rent increases — supply-chain issues have increased expenses for transporting goods, gas prices are also on the rise, and a healthy labor market means that employees won’t stick around for low wages. Some industries have it worse than others, according to the Alignable report. Restaurants have it the worst, with 41% failing to pay rent in May, up 8% from April. In a sense, the Covid-19 pandemic remains ongoing. That’s true in the business world as well, with only around a third of businesses having recovered from the 2020 downturn: Businesses can rely on some software solutions to slightly reduce their costs — a good POS system can manage every aspect of a retailer or restaurant for a monthly price that comes out to a dollar or two a day. But to be honest, that won’t go far. There’s no easy solution behind the dismal data on display. Many businesses will need to cut costs, move locations, or go under in the coming months. One industry that’s on the way up, however, are massage therapists: Their collective rent delinquency rate dropped down to just 17% in May, down from 33% in April. Perhaps all the other small business owners are getting massages to deal with their stress.
