WASHINGTON — According to a new survey recently released by the National Federation of Independent Business (NFIB) Research Center, increasing numbers of small-business owners are reporting “inflation” as their single most important problem.
The survey, conducted in mid-April, found that more than half (62%) reported that inflation was having a “substantial” impact on their business, with about a third (31%) saying that it was having a “moderate” impact. Only 6% stated that they found the effect “mild.”
“Inflation is a new challenge for most small business owners,” says Holly Wade, executive director of NFIB’s Research Center. “Inflation has reached levels not seen for the last 40 years and is dominating business decisions for small employers across the country. Small-business owners have been adjusting business practices in order to compensate for the inflation pressures resulting from supply chain disruptions, staffing shortages and rising gas prices.”
In the survey, owners reported that “inventory, supplies, and materials” and fuel (gasoline, diesel, fuel oil, etc.) were the top contributing factors to higher costs in their business. More than three-quarters (77%) of small-business owners reported inventory, supplies, and materials were substantial contributors to higher costs.
While costs such as labor, rent and utilities all contributed to cost pressures for many small-business owners, the survey found, these costs were having less of an impact than supplies and fuel. In fact, 44% reported that in the last six months, they have been unable to acquire a key input needed to produce a good and service they offer to customers.
To maintain profitability as their own costs grew, the vast majority of small-business owners surveyed had started to pass these increases onto their consumers, with 86% increasing the price of their goods and services. Sixty-eight percent of small employers were planning to raise average selling prices in the next three months. Forty percent reported they would raise prices by 10% or more and almost half (47%) reported between 4 and 9%.
Owners also reported reducing the quantity of the goods or services they use to help stabilize cost increases. About a fifth (21%) reported they had reduced the quantity of materials or goods used to produce the final product(s) to absorb higher costs.
In addition, 31% reported taking on debt to finance their higher costs.
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