Small business owners say inflationary pressures are only getting worse

Small business owners say inflation is putting pressure on their business. The new study from the NFIB Research Center assessed the impact of inflation on small businesses in the US.

Small business owners say inflationary pressures are only getting worse

More than half (56%) of small business respondents said inflation has a significant impact on their business. More than a third (36%) of small business employers say inflation has a moderate impact on their business, and three quarters (75%) of owners say inflation is increasing its impact. Only 1% of small business owners surveyed said inflationary pressures are easing.

The findings of the study are important because they show which specific issues small business owners struggle with the most. The survey also reveals what small businesses are doing to absorb costs and what key decisions they are making to sustain profits.

Commenting on the findings of the study, Holly Wade, executive director of the NFIB research center, said: “Inflation has started on Main Street and owners across the country continue to make business decisions in response.

“As owners manage the highest inflation in decades, they are also managing persistent staff shortages and supply chain disruptions, hurting their businesses and consumers.”

Fuel costs add to the pressure small businesses face

Rising fuel costs are proving to be one of the biggest concerns for small businesses. More than three quarters (79%) say the rising costs of petrol, diesel and heating oil are a major contributor to rising operating costs.

Rising costs of inventory, supplies and materials also contribute significantly to higher costs, said 72% of small business owners surveyed for the report. Labor is another substantial contributor to increased costs, with 31% of small business owners citing labor as a major pressure.

absorb costs

The NFIB Research Center survey asked small business owners how they are absorbing costs in the current rising inflationary environment.

A large majority (86%) said they raise the prices of their goods or services to fight back inflation. 7% of these small business owners said the efforts absorbed all of their overall cost increases, 36% reported the most, and nearly half (47%) said they increased the cost of about half of their goods or services.

Another leading way small business employers are absorbing the cost of inflation is through lower business revenues, with 82% reporting making such changes. 9% reported that this absorbed all of their overall cost increases.

Less than a fifth (17%) of small business owners have reduced the quality of materials or goods to absorb higher costs due to inflation. 23% switched to lower costs of materials or goods, such as inventory, supplies, to produce finished products and services.

The survey also found that nearly a third (29%) of small business employers take on debt to fund higher costs.

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