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Inflation is showing signs of leveling off, but small businesses still face severe challenges and the economy remains uncertain.
The consumer price index shows that prices fell slightly in July, but inflation remains at its highest level in nearly 40 years. The latest US Chamber and MetLife Small Business Index reveals that inflation is currently the top concern for business owners. Nearly seven in 10 said they had raised prices to deal with rising input costs.
Here’s how four SMEs across different industries and geographies across the country are coping with the effects of inflation.
Durand’s Soul Food
Los Angeles, California
Restaurant owner Greg Dulan has raised prices twice at two cafeteria-style restaurants to meet supply costs. This affected the number of customers coming to the store.
“Every time we raise prices, people decide they can either eat at home or find food somewhere cheaper,” says Dulan.
Dulan’s Soul Food Kitchen celebrated its 30th anniversary in June, and Dulan says inflation is a “tremendous challenge.”
“Everything, everything went up, especially our protein,” Dulan said.
In addition to rising ingredient costs, Dulan’s employs mostly minimum-wage labor, and California-mandated wage increases are severely impacting the restaurant’s bottom line.
“Business recovery and revitalization is not the same in all areas. In South LA, we are still down,” Dulan said. I hope they get back together, but I have concerns. ”
jam hop gymnastics
Lake Ham, Minnesota
Jams Hops has raised prices to offset rising operating costs, especially rising labor costs. Owner Brenda Norby says it’s common for gym classes to increase by 4-5% each year, but this year she’s increased them by 10%.
“Maybe we should have had more,” said Norby. “We didn’t want to shock clients or customers, but we knew something had to be done to maintain the status quo.”
Jam Hops’ biggest challenge right now is hiring enough staff to meet the demand for gym classes that currently have waiting lists.
“Many of my employees are high school and college kids. [big retail/restaurant chains] Or somewhere else, you’ll get at least $15 to $17 an hour. ”
The Minnesota fitness center is celebrating its 25th anniversary this year. Nolby hopes consumer demand will remain high and plans to expand soon.
“I know gas prices are high. I know supplies are scarce. But my class has a waiting list. It shows that we have enough income.”
hideaway cafe
Winchester, Virginia
The Hideaway Café, a coffee shop and community gathering space in Virginia, is struggling to keep up with increasing costs and supply availability.
“Supply costs increased faster than I expected,” says owner Victoria Kidd. “We have had several incremental price increases to keep up with the rapidly changing costs of our products.
The impact of inflation is hitting service industry executives like Kidd hard.
“We started the year with a minimum wage hike, then we saw a 10-25% hike in some categories. We also saw an increase in the cost of services and rents. It’s a storm,” says Kidd.
Customer traffic was high during the summer months, with many out-of-town visitors, but Kidd expects business to slow as costs rise and the end of summer approaches.
“This is a strange time for doing business. On the one hand, we’re seeing people leave their homes and try to capture the ‘feel’ of life pre-pandemic. On the other hand, the cost of doing business has never been higher. ”
VetCor service
Tampa, Florida
Paul Huszar, owner of VetCor Services, uses standard estimating computer software to calculate prices for his emergency water and mold damage repair company.
“What we found was that the software wasn’t agile or responsive enough to take into account, for example, rising fuel costs,” Paul says. “It’s cut to our margins.”
Huszar sometimes adds surcharges to compensate for the high cost of products such as fuel, but this only slightly mitigates the impact of inflation. With lower profit margins, businesses face additional pressure to make all repairs as efficient as possible in order to be profitable.
VetCor also has a franchise business, and after the franchise slowed down significantly during the pandemic, inflation concerns hit the business, preventing VetCor from growing at the rate it expected.
But Huszar remains “cautiously optimistic.” Because the economic downturn allows VetCor Services to create opportunities for people who want to own a business with minimal risk. This is an attractive feature of starting a franchise in an essential industry.
About the author
victoria king
Communications Coordinator, U.S. Chamber of Commerce
Victoria is the Communications Coordinator for the Chamber of Commerce. She previously worked as a program support her assistant at the US Small Business Administration.
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