Optimism low but resiliency high among entrepreneurs in Las Vegas

Evergreen Coffee opened its doors in Henderson almost two years ago, hoping to restore some of the community and neighborhood connections that had been lost during the COVID-19 pandemic.

It was slow going at first, but community support ultimately helped the coffee shop grow “tremendously,” said Lovely Mempin, co-owner and creative director of Evergreen.

Few people understand the challenges of opening a small business, Mempin said, so Evergreen would rely on the depths of knowledge from other small-business owners. The coffee shop does the same for its peers, she said, and tries to help other entrepreneurs by hosting small business pop-ups.

“We understand it’s really hard to get a brick-and-mortar in Vegas unless you are established, unless you have the capital—unless you have those two things,” she said. “It’s hard to get a brick-and-mortar. So if we can lend our space to those businesses so they can promote themselves, so that our community can get to know their faces, so that we can promote small business in general and how amazing it is for our city, for our community, then, why not?”

Even with community support, owning a small business is not without its challenges, and Mempin said she’d be lying if she didn’t consider the economy’s uncertain future and high inflation rates cause for concern.

Experts would say she’s not alone.

The National Federation of Independent Business (NFIB) Small Business Optimism Index decreased in March to its lowest level since December 2012, according to the organization’s report.

The primary reason for low levels of optimism in small business is probably inflation, said Charlie Dougherty, a senior economist with Wells Fargo, which writes a report on the monthly NFIB survey.

“You have sales expectations that are pulling back somewhat, meaning a rising share of small businesses are expecting a slower rate of future sales,” Dougherty said. “So, with inflation still an issue, that’s a challenging environment for many small businesses.”

Small businesses are also contending with input costs significantly higher than they were just a few years ago, he said.

That’s true for Evergreen, which Mempin said intentionally sources from other small businesses to boost and uplift the local economy. It’s part of the so-called “Evergreen ethos,” she said, to prioritize community.

Those vendors are feeling the same pain of inflation that Evergreen is, however, so that many of them have been forced to raise their prices, Mempin said. She understands why, Mempin said, but it still makes her nervous not knowing how long high levels of inflation are going to last.

“We’re very grateful that we have an incredibly supportive community who believes in what we believe,” she said. “But at the same time, the thought in the back of my head is—how much more can they take before it becomes too much?”

Even as low levels of small-business optimism persist, Mempin said small business seems to be continually growing and expanding in Las Vegas.

“I would say that we lean more toward being hopeful, because … we’ve seen how many people have traveled here—have moved here from other states,” she said. “We’ve seen new businesses open and old businesses expand. We’ve seen development and new housing and commercial real estate. And so, looking at all of those factors, it makes us hopeful for the future.”

Winnie Dowling, state director of the Nevada Small Business Development Center—which in 2023 aided nearly 3,000 entrepreneurs statewide—said a survey of small businesses that the organization conducted last summer had inflation “front and center.”

Around 44% of respondents said adapting to inflation was a challenge to operating their small business, and more than 70% said funding was the biggest challenge to getting their startup off the ground.

Access to capital is a big issue, Dowling said.

“When interest rates are high, you just don’t have that access to capital,” she said. “The banks aren’t lending to as many people, you have to have collateral, you have to have skin in the game. And this is a big issue because … banks like for that number to be high. So they’re just not getting access.”

There’s a few headwinds that need to change direction for small optimism to get a boost, Dougherty said. He pointed to the need for inflation to come down on a sustained basis, certainty on the economic outlook considering recent fears of recession, and clarity on monetary policies.

“So that’s another thing that potentially helps small-business confidence—could help brighten small-business sentiment,” he said. “Reducing uncertainty with regards to inflation, monetary policy and general economic outlook.”

Dowling echoed that interest rates going down are likely to increase small-business optimism levels, though she noted that people will continue to start businesses no matter the state of the economy.

Small-business owners take all the risk, she said, creating most jobs and supporting big industry. They’re resilient and innovative, and continue to try despite failure, she added, even as the NFIB report shows their optimism dropping.

“We still see just as much interest in starting a business,” Dowling said. “People will just keep throwing noodles on the wall, and some of them will stick and someday be great, big businesses.”

The impact small business has on the nation’s overall U.S. economy is often underestimated, Dougherty said, and there’s a lot that the trends of the NFIB small business index and other measures can tell researchers about the direction the economy is going.

“They are a key driver of economic growth,” he said. “So it’s important to understand what’s going on in the sector, what problems they’re encountering, because they often offer a forward look on to what the overall macroeconomic data will eventually say.”

When asked what she would say to entrepreneurs who may be feeling less than optimistic in the small-business sector, Mempin emphasized that she would remind people “they’re not alone.”

Though it often feels that way, she said, there is always help available to small-business owners. And when there are so many short-term occurrences to deter you from reaching your goals, she said, maintain a long-term mindset instead.

“You’re going to have slow days,” she said. “You’re going to have seasons where it’s just slow because the economy is not doing well—because people are going on vacation and they’re just not in town. You will have slow times, you will have hard times, but you just have to keep hanging on and keep believing that what you’re doing is right and that it will get better. … Understand that tough times make you stronger and grow you as a business and as a company.”

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