Despite some formidable obstacles and challenges, American small businesses keep adapting while remaining optimistic. As small companies continue to battle inflation and supply chain issues, they are also making those adjustments that will enable them to remain positive. In some recently published research, the National Federation of Independent Businesses has discovered the exact strategies being used to overcome many present obstacles. The following is taken directly from that recently published report:
- Overall, all small employers reported inflation was impacting their business to varying degrees. Over half (62%) reported that inflation is having a substantial impact on their business while about a third (31%) reported it had a moderate impact. Only 6% of owners report it having a mild impact.
- Owners reported that “inventory, supplies, and materials” and fuel (gasoline, diesel, fuel oil, etc.) are the top contributing factors to higher costs in their business.
- Over three-quarters (77%) of small employers reported inventory, supplies, and materials as being a substantial contributor to higher costs, while 18% reported moderate.
- Over three-quarters (77%) of small employers reported that rising prices for fuel (gasoline, diesel, fuel oil, etc.) is a substantial contributor to higher costs.
- Labor, rent, and utilities contribute to cost pressures for many small employers, but to a lesser degree than supplies/inventory and fuel.
- The main tool small employers have to absorb inflation pressure costs is to raise prices for goods or services, passing higher input costs on to their customers.
- Eighty-six percent of small employers are increasing the price of their goods or services.
- Eighty-four percent reported experiencing lower business earnings to some degree.
- Owners have also reported reducing the quantity of the goods or services offered to help stabilize cost increases with about a fifth (21%) of small employers reporting reducing the quantity of materials or goods used to produce the final product(s) to absorb higher costs.
- Thirty-one percent of small employers are taking on debt to finance higher costs.
- Sixty-eight percent of small employers are planning to raise average selling prices in the next three months and 22% were not sure.
- Forty percent reported they would raise prices by 10% or more and about half (47%) reported between 4-9%.
- Almost three-quarters (72%) of small employers reported assessing the adequacy of their price levels of the goods or services they provide more frequently than twice a year.
- Thirty-one percent reported assessing price levels weekly, 21% monthly, and 20% every few months.
- About half (46%) of small employers have contracts with customers with fixed price agreements, making price adjustments more difficult depending on the terms of the contract.
-Written by Kevin Sawyer
