10 Ways The Ukraine-Russia War Is Affecting Small Businesses In The United States

From preparing for even higher inflation and disrupted supply chains, to cybersecurity under increased threat, the Russia-Ukraine conflict is wreaking havoc on businesses around the world, including including in the United States.

Knowing the impact war could have on businesses can help businesses take the necessary precautions and be better prepared.



10 Ways The Ukraine-Russia War Is Affecting Small Businesses In The United States

Take a look at 10 ways the war in Russia has affected small businesses in the United States.

Supply chain disruption

The global supply chain, which has not fully recovered from the COVID-19 pandemic, has been further affected following the Russian-Ukrainian war.

For companies sourcing materials and goods that rely on Russia or Ukraine, they can expect even longer delays.

Companies must therefore assess their supply chain risks and make inventory decisions accordingly.

Food prices are rising

The cost of food and raw materials was already rising before the war broke out due to the COVID-19 pandemic, with supply chain disruptions and increases in energy prices. However, since Russia invaded Ukraine, wheat prices have risen sharply.

The escalating cost of certain products has a negative impact on the businesses that depend on them.

Known as the “breadbasket of Europe”, Ukraine accounts for around 20% of beer barley consumption. The conflict in Ukraine threatens to drive up the price of beer. Such hikes would inevitably impact small businesses that depend on beer, such as bars and restaurants.

Gas price increase

Of course, it’s not just the cost of food that’s rising, as the war in Ukraine has rattled the oil market, leading to higher gas prices in the United States.

With gas prices approaching $4 nationwide, businesses that depend on gas for their operations are feeling the pinch, with higher charges at the pump directly impacting cash flow.

Inflated borrowing costs

The US Federal Reserve has already raised interest rates, but rising war costs are likely to drive rates higher. This would result in higher borrowing costs for businesses and consumers.

Product storage

As many sectors face shortages of essential products, the panic antics of the pandemic could be repeated. As a result, businesses and consumers can stock items. Farmersfor example, who have seen fertilizer prices skyrocket by up to 300% since the start of 2021, and are set to rise further due to the Russian-Ukrainian war, are threatening to bulk buy fertilizers like.

Growing Cybersecurity Concerns

A week before Russia invaded Ukraine, the Cybersecurity and Infrastructure Security Agency (CISA) released a rare “Shield up” warning to alert on how businesses could be impacted by malicious cyber activity against the United States.

Even if a business is not directly at risk from a cyberattack, the organizations it relies on to stay operational may be.

With the threat of malicious cyberattacks from Russia remaining high, small businesses should remain vigilant and take protective measures to protect their business from potential attacks.

Halt of operations in Russia

Due to sanctions imposed on Russia impacting logistics, a number of companies halted their operations in Russia.

Agricultural and logistical difficulties

In response to the Russian attack, American agricultural companies operating in Ukraine have been forced to close offices and facilities in the war-torn country.

Logistical difficulties are one of the main challenges for many American agricultural companies that trade with Russia and Ukraine. Importers and exporters face problems in settling payments in case trading partners work with sanctioned Russian banks.

Shortage of software engineers

In recent years, Ukraine has become a popular country for software development outsourcing. Like reports showUkrainian software developers were hailed as the ideal destination for software development, and subsequently more North American companies chose Ukraine to expand their development capacity.

However, Russia’s invasion of Ukraine disrupted basic public services like telecommunications. Not only have these essential services been significantly disrupted, many software professionals have left Ukraine and moved to neighboring counties. As a result, small businesses in the United States that had count on the use of outsourced software engineers in Ukraine may have encountered problems and can expect the cost of this talent to increase and these vacancies to be more difficult to fill.

Russian themed/named businesses took a hit

Many small businesses in the United States that have a Russian name or theme have faced major disruption since war broke out in Ukraine.

Russian Samovar, a restaurant in Manhattan’s theater district, has had its decline in business practically overnight, with a series of cancellations. The owners are now under pressure to remove “Russian” from its name.

A similar situation faced The Russian House restaurant in Austin, Texas. The owner admitted that the name, at the moment, hurts, so he renamed the restaurant The House.

With small businesses feeling the pinch from multiple directions, it is essential to plan for the potential impact of war on business operations and develop a strategic business forecast to understand how the business will be affected so that risks can be managed from proactive way.

Image: Depositphotos


Margie D. Carlisle