Question

How can small businesses thrive with minimum wage present and increasing?

Answer 1

The resources are very much important for any business. The three primary factors of production are land, labor, and capital. The business operates using these factors of production and pays rent, wages, and interest respectively for utilizing those resources.
The labor is unique here because these are human beings and they have emotion, psychological as well as physical needs.
They also seek growth and so rise in wages which is an old issue between labor and management.

The wage is decided by the market but it complained that management use pressure tactics to keep it down and hence the government decided to enact a minimum wage law. The minimum wage can which rising in the US could be affordable to corporations but small businesses could see that as unsustainable.
However, there are some strategies which small businesses can adopt here.

Any business can have space for cost-cutting. Mostly, it was ignored in the operation but a careful cost audit or management view can reveal many options where cost could be cut down. The owner in such case can avoid reducing the number of employees and can boost morale.

The owner can also create an environment in the workplace where employees will work more productively and higher productivity means more production, higher quality and higher margin overall.

The owner can also use employees to reskill them for specialization or value addition in the operation. Now the business can offer product or service mix which could increase margin as well as overall productivity which would compensate for the rise in wages.

The last option is to reduce staff. This seems to be very easy but generally, it affects the employee morale in a negative way and should be considered in the extreme situation.