Small business owners say the pressure put on their business from inflation is getting worse. The new survey released by the NFIB Research Center assessed the impact inflation is having on small businesses in the US.
Small Business Owners Say Inflation Pressure Only Getting Worse
More than half (56%) of the small business owner respondents said that inflation is having a significant impact on their business. Over a third (36%) of small business employers say that inflation is having a moderate impact on their business, and three quarters (75%) of owners say the impact of inflation is getting worse. Only 1% of the small business owners surveyed said that inflation pressure is easing up.
The findings of the survey are important, as they show which specific issues small business owners are struggling with the most. The research also shows what small businesses are doing to absorb the costs and the important decisions they are making to maintain profit.
Commenting on the findings of the research, Holly Wade, Executive Director of NFIB’s Research Center, said: “Inflation has set in on Main Street and owners across the country continue to make business decisions in response.
“As owners manage the highest inflation rate in decades, they are also managing an ongoing worker shortage and supply chain disruptions, which is hurting their businesses and consumers.”
Cost of Fuel is Contributing to Pressure Small Businesses Face
The rising cost of fuel is proving to be one of the biggest concerns impacting small businesses. Over three quarters (79%) say that the rising cost of gasoline, diesel, and fuel oil are a significant contributor to rising business costs.
Rising costs of inventory, supplies and materials are also substantially contributing to higher expenses, 72% of the small business owners surveyed for the report said. Labor is another substantial contributor to higher costs, with 31% of small business owners citing labor as a significant pressure.
The NFIB Research Center’s survey asked small business owners about how they are absorbing costs in the current rising inflation climate.
A large majority (86%) said they are increasing the prices of their goods or services as a means of fighting back against inflation. 7% of these small business owners said that the effort was absorbing all their total cost increases, 36% reported most, and almost half (47%) said they were increasing the cost of around half of their goods or services.
Another leading way small business employers are absorbing inflation costs is through lower business earnings, with 82% reporting making such changes. 9% reported this absorbing all their total cost increases.
Less than a fifth (17%) of the small business owners have reduced the quality of materials or goods to absorb higher costs generated by inflation. 23% switched to lower cost of materials or goods, such as inventory, supplies, to produce final products and services.
The survey also found that almost a third (29%) of small business employers are taking on debt to finance higher costs.
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SMBs need to raise prices to survive. It’s the hard truth. You can’t keep absorbing those costs forever.