Hopkinsville Brewing Company co-owner Kate Russell, pictured to the right of co-owner Joey Medeiros, said the business had to raise prices due to inflation.
Mary Katherine Russell
Small business owners have had a rough year.
First, the Covid-19 pandemic caused many to lose revenue. Now, they are suffering from higher costs as inflation rises.
The consumer price index, which measures the prices of goods and services, rose by 8.5% in March from a year ago, while the producer price index, which pays wholesale prices, rose 11.2% year-on-year in March.
For Kate Russell, a 40-year-old Kentucky-based Brewing Company owner in Kentucky, that means everything from equipment and aluminum to grain and fuel has made everything more expensive.
On average, total costs have risen by between 15% and 20%.
“We sat on it for as long as we could before we finally had to break it and raise prices,” he said. “We felt really bad about it. We still feel really bad.”
Inflation, as well as supply chain problems and staffing challenges, weigh heavily on companies. 91% said that these broader economic trends have a negative impact on their business, according to a survey of 1,107 small business owners by Goldman Sachs 10,000 Small Businesses Voices. 73% said that rising energy costs are having a negative impact on their performance.
However, like Russell, small business owners are hesitant to raise prices, according to the CN22 | SurveyMonkey Small Business Survey for Q2 2022.
75% say they are currently experiencing a rise in the cost of their supply, but only 40% are raising prices. Prices adjusted for less than 47% of homeowners in the first quarter.
However, overcoming the cost to consumers is the main tool considered by small business owners, according to a survey by the National Federation of Independent Businesses. Some of the higher costs are also being absorbed. About 31% are taking on debt.
“Inflation is a new challenge for most small business owners who are currently working,” said Holly Wade, executive director of the NFIB Research Center.
“They’re seeing it as extremely difficult to navigate the need to absorb these price increases, and even predicting how long these price increases may last,” Wade added.
More from Invest in You:
How Small Businesses Can Avoid Financial Steps
What Americans intend to spend more money on is going up
Employers increase the benefits of mental well-being among the Great Resignation
Small business owners are also being creative in their search for alternative solutions, such as reducing the number of goods and services offered to help stabilize costs, the survey found.
Jennifer Glanville, director of collaboration and collaboration at the Boston Beer Company, sees something as the head of the company’s Brewing the American Dream program.
The initiative partners with nonprofit lenders to help them raise capital and provides one-on-one training for small business owners. Recently, the focus has been on helping to navigate higher costs.
“Consumers expect to spend more whether they want to or not, but how can we really help these businesses succeed and keep other costs down,” Glanville said.
This means looking for efficiency with the demand and network as a way to help and perhaps find products and services at a reduced cost.
For his part, Russell is now looking at reducing live entertainment and curiosity nights to reduce spending. He and his partner have also taken salary cuts.
Luckily, customers aren’t really complaining about the price increase, he said, because it’s happening all over the economy. This is due to the sharp rise in gas prices, which rose by 18.3% in March compared to the previous month and by 48% compared to the previous year, according to data from the Department of Labor’s CPI.
Mindy Godding, co-founder of Abundance Organizing, says higher gas prices are affecting her home organizing business.
Sandra Fazzino 2022
That’s the decent thing to do, and it should end there. His staff can go to work for an hour. They soon found themselves spending $ 50 and $ 70 to fill their tank.
“They felt really broken and frustrated,” Godding, who founded the business in 2010, said.
“I was confident that we would start losing staff if we didn’t act in a real definitive way,” he added.
As a band-aid, he gave the staff $ 25 gift cards. A few weeks later, the company raised the salaries of field workers from 25 percent to 30 percent, Godding said. To pay, he raised prices for consumers.