Hopkinsville Brewing Company co-owner Kate Russell, pictured to the right of co-owner Joey Medeiros, said the deal had to raise prices due to inflation.
Mary Catherine Russell
Small business owners have had some difficult years.
First, the Covid-19 pandemic has caused many to lose revenue. They are now facing higher costs as inflation rises.
The consumer price index, which measures the prices of goods and services, rose by 8.5 percent in March compared to the previous year, while the producer price index, which measures the prices paid by wholesalers, jumped by 11.2 percent in March. annually.
For Kate Russell, 40, co-owner of the Kentucky-based Hopskinsville Brewing Company, that means everything from equipment and aluminum to grain and fuel has become more expensive.
On average, its total costs increased by about 15% to 20%.
“We sat on as much as we could before we finally just had to break down and raise prices,” she said. “We felt really bad about it. We still feel really bad about it.”
Inflation, as well as supply chain problems and labor challenges, are burdening businesses. Some 91% said these broader economic trends have a negative impact on their business, according to a survey of 1,107 small business owners from Goldman Sachs 10,000 Small Businesses Voices. A total of 73% said that the increase in energy costs has a negative impact on their final results.
However, like Russell, small business owners are reluctant to raise prices, according to the latest CNBC SurveyMonkey Small Business Survey for the second quarter of 2022.
Some 75% said they are currently experiencing an increase in the cost of their inventories, but only 40% are increasing prices. That is less than the 47% of owners who corrected prices in the first quarter.
However, passing on costs to consumers is the main tool that small business owners turn to, according to a separate study by the National Federation of Independent Businesses. They also absorb some of the higher costs. Some 31% are in debt.
“Inflation is a new challenge for most small business owners currently in business,” said Holly Wade, executive director of the NFIB Research Center.
“It’s incredibly difficult for them to cope because they have to absorb these increased prices, and they also predict how long these price increases can last,” Wade added.
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Small business owners are also becoming creative, looking for alternative solutions, such as reducing the amount of goods and services offered to stabilize costs, research has shown.
This is something that Jennifer Glanville, director of partnerships and cooperation at Boston Beer Company, sees in her role as head of the Breving the American Dream program.
The initiative is in partnership with non-profit lenders to help access capital, and also offers one-on-one training for small business owners. Recently, the focus has been on helping them overcome higher costs.
“Consumers expect to spend more, whether we like it or not, but it’s really a way we can help position these companies to succeed around it and reduce some of their other costs,” Glanville said.
That could mean looking for efficiency with ordering and networking as a way to find support and perhaps products and services at a reduced price, she said.
I was pretty sure we were going to start losing employees if we didn’t behave in a really definite way.
Mindi Godding
Co-founder of Abundance Organizing
For his part, Russell is now considering reducing live entertainment and trivial evenings to cut costs. She and her partner also reduced their salaries.
Fortunately, buyers are not really complaining about the price increase, she said, because it happens in the economy. What they are talking about is the incredible increase in gas prices, which in March increased by 18.3% compared to the previous month and 48% compared to the previous year, according to CPI data from the Ministry of Labor.
Mindy Goding, co-founder of Abundance Organizing, says higher gas prices affect the end result of her in-house business.
Sandra Facino 2022
That’s what really affects Mindy Goding, co-founder of Richmond, Virginia-based Abundance Organizing. Its employees can travel up to one hour to work. They soon spent $ 50 to $ 70 to fill the tank.
“They really felt cramped and frustrated,” said Goding, who co-founded the company in 2010.
“I was pretty sure we would start losing employees if we didn’t behave in a really definite way,” she added.
As a patch, she gave employees a $ 25 gift card. A few weeks later, the company increased the salaries of its workers in the field by 25% to 30%, Goding said. To pay for it, it raised consumer prices.