While many costs have come down for small business, rents remain high and in some cases are still rising, forcing many owners into some uncomfortable decisions.
Some are raising prices. Other owners are choosing to be late on payments or seeking out new locations where the rent is lower. A few are pushing back against their landlord.
Although inflation is easing, it remains a top concern for small businesses. According to Bank of America internal data, rent payments per small business client rose 11 percent year-over-year in July. That’s more than twice the increase for renting and owning a residence, a metric known as shelter, according to the government’s monthly Consumer Price Index. That figure rose 5.1 percent in July.
And although the situation has improved since the height of the pandemic, a survey by business networking platform Alignable of more than 6,000 small business owners found that 41 percent could not pay their July rent on time and in full. And 52 percent said they’ve encountered rent spikes in the past six months.
Standing firm against a landlord sometimes works. Janna Rodriguez has run her home-based The Innovative Daycare Corp. in Freeport, Long Island, since 2018. When she first signed her lease, she paid $3,500, plus costs including landscaping and maintenance. In 2020, the pandemic began, and her landlord raised her rent to $3,800 and also made her start paying half of the homeowner’s insurance. Last year, the landlord raised her rent to $4,100, plus the additional expenses.
Rodriguez raised her prices for the first time, by $10 per child per week, to help offset the rising rent.
This year she successfully pushed back when the landlord wanted to raise the rent yet again.
“I said to them, if you do that, then I’m going to find another property to move my business to, because at this point now you’re trying to bankrupt a business, right?”
It’s worked – so far. But Rodriguez is worried about the future.