What's Hot in Small Business – Chris Crum
Chris Crum writes for Small Business Resources about what's new for small business. Chris was a featured writer with the iEntry Network of B2B Publications where hundreds of publications linked to his articles including the Wall Street Journal, USA Today, LA Times and the New York Times.

Business.org Report Looks at Effects of Inflation on US Small Businesses

Business.org Report Looks at Effects of Inflation on US Small Businesses

Business.org recently released a report looking at the impact of inflation on U.S. small businesses. Citing information from the Bureau of Labor Statistics, they note that inflation accelerated in 2021 from March through September more than at any point in 2020, and that inflation in 2021 was more than twice the highest increases in 2020 for at least five consecutive months.

Inflation

Image via Business.org

Business.org partnered with Pollfish to survey 700 small business owners and used the Consumer Price Index to find yearly and monthly inflation rates. According to their findings, the country faced its highest month-over-month inflation rates since 2008, and 2021 accounts for half of the 10 highest month-over-month inflation rates since 1990.

Consumers have paid higher prices for many goods and services, but small businesses have also been facing the challenges.

"If you’re finding it harder these days to afford your business expenses, you’re not alone," says Trevor Wheelwright at Business.org. "Since the pandemic began, 92% of small-business owners reported that the cost of supplies or services needed to run their business has increased since the pandemic started."

Small Business Expenses

Image via Business.org

For 2021, the survey found that 71 percent of small business owners reported at least a 20 percent increase in costs for supplies and services. Sixteen percent reported a 50 percent increase, 13 percent reported a 40 percent increase, and 16 percent reported a 30 percent increase.

Sixty percent of business owners surveyed said they are concerned about the financial health of their business because of inflation. Forty-seven percent reported decreased profit margins due to inflation since the beginning of the pandemic. Thirty-seven percent said inflation will hurt the general health of their business, and another 37 percent said customers have complained about inflated prices. Thirty percent think higher prices will deter customers from shopping at their store.

Eighty-nine percent of small business owners polled have, indeed, increased their prices. Forty-five percent have raised prices by more than 20 percent, while 44 percent have raised them up to 15 percent. Only 11 percent said they had not increased prices.

Beyond raising prices, businesses are looking for other ways to cope with inflation. Forty-six percent said they are reducing inventory, while 44 percent said they are purchasing software to help track their businesses expenses. Twenty-four percent indicated that they have hired an accountant to find solutions to save money, and 40 percent have cut their marketing spend. Twenty-nine percent have even moved to a less expensive workspace. Only 17 percent said they have not changed anything to reduce costs.

Of course, inflation isn’t the only challenge small businesses have faced since the pandemic began. Another major obstacle has been the widely reported supply chain disruption. Sixty-four percent of respondents to the Business.org survey reported an inability to acquire products or perform services. Fifty-six percent indicated an inability to meet customer demand, while 43 percent said they’ve been forced to change the products they keep in inventory. Forty percent reported an inability to repair or maintain property or equipment, and 31 percent said they have had to stop selling certain products.

Despite problems from inflation and supply chain issues, most of the business owners polled still feel optimistic, with a whopping 85 percent saying they feel a general sense of increased support for shopping local, and 71 percent actually reporting an increase in customer spending over the previous six months.


Read other business articles