The conflict between Russia and Ukraine is taking its toll on businesses around the world, including in the United States.
By being aware of the consequences of the war for companies, companies can take the necessary precautions and be better prepared.
10 Ways The Ukraine-Russia War Is Affecting US Small Businesses
Check out 10 ways the war in Russia is impacting small businesses in the United States.
Supply chain disruption
The global supply chain, which has not fully recovered from the COVID-19 pandemic, has moved further in the wake of the war between Russia and Ukraine.
For companies that source materials and goods that depend on Russia or Ukraine, they can expect even longer lead times.
Companies therefore need to evaluate their supply chain risk and make inventory decisions accordingly.
Food prices are going up
The cost of food and raw materials was already rising before the war broke out due to the COVID-19 pandemic, with supply chain disruption and rising energy prices. However, since Russia invaded Ukraine, the prices of wheat as wheat have risen sharply.
The rising costs of certain products have a negative effect on companies that rely on them.
Ukraine is known as the “breadbasket of Europe” and accounts for about 20% of barley’s beer consumption. The conflict in Ukraine threatens to drive up the price of beer as beer. Such increases would inevitably affect small businesses that rely on beer, such as bars and restaurants.
Gas price increase
Of course, it’s not just the cost of food that is rising, as the war in Ukraine has shaken the oil market, leading to higher gas prices in the US.
With gas prices approaching $4 across the country, companies that rely on gas for their operations are feeling the bottleneck, with higher costs at the pumps having a direct impact on cash flow.
Inflated borrowing costs
The US Federal Reserve has already raised interest rates, but the rising costs of the war are likely to raise interest rates even further. This would lead to an increase in borrowing costs for businesses and consumers.
With many sectors facing shortages of essential products, the panic-buying antics of the pandemic may be repeating. As a result, businesses and consumers can store items. Farmers, for example, who have seen fertilizer prices rise by as much as 300% since early 2021 and who appear to be rising further due to the war between Russia and Ukraine, are threatening to buy fertilizer in bulk.
Growing Cybersecurity Concerns
A week before Russia invaded Ukraine, the Cybersecurity and Infrastructure Security Agency (CISA) issued a rare “Shields Up” warning warning about how businesses could be affected by malicious cyber activity against the US.
Even if a business isn’t directly threatened by a cyber attack, the organizations it relies on to stay operational can be.
With the threat of malicious cyber-attacks from Russia remaining high, small businesses must remain vigilant in taking protective measures to protect their businesses from potential attacks.
Cessation of operations in Russia
Due to sanctions against Russia affecting logistics, a number of companies have ceased operations in Russia.
Agriculture and logistical problems
In response to Russia’s attack, US farms operating in Ukraine have been forced to close offices and facilities in the war-torn country.
Logistical problems are one of the main challenges for many US farms that trade with Russia and Ukraine. Importers and exporters have problems clearing payments in case the trading partners cooperate with sanctioned Russian banks.
Shortage of software engineers
Ukraine has become a popular country for outsourcing software development in recent years. As reports show, Ukrainian software developers have been hailed as the ideal destination for software development, and subsequently more companies in North America had chosen Ukraine to expand their development capacity.
However, the Russian invasion of Ukraine has disrupted basic public services such as telecommunications. Not only have such essential services been significantly disrupted, but many software professionals have left Ukraine and moved to neighboring provinces. As a result, small businesses in the US that relied on the use of outsourced software engineers in Ukraine may have run into trouble and can expect the cost of this talent to rise and such vacancies to be harder to fill.
Companies with a Russian theme/name got a hit
Many small businesses in the US that have a Russian name or theme have experienced major disruption since the outbreak of the war in Ukraine.
Russian Samovar, a restaurant in Manhattan’s Theater District, saw its sales plummet almost overnight, with a series of cancellations. The owners are now under pressure to take the “Russian” off its name.
A similar situation arose at The Russian House restaurant in Austin, Texas. The owner admitted that the name hurts at this point, so he renamed the restaurant The House.
As small businesses feel the tricks of the trade from multiple directions, it is vital to plan for the potential impact of the war on business operations and develop a strategic business forecast to understand how the business will be affected so as to proactively mitigate risks. can be managed.
This post 10 Ways The Ukraine-Russia War Is Affecting US Small Businesses was original published at “https://smallbiztrends.com/2022/04/what-the-russia-ukraine-crisis-means-for-small-businesses-in-the-us.html”