Uncertainty leads to concern for small business owners
Springfield owner worries inflation may impact customer base.
Small business owners are feeling gloomy as inflation, a labor shortage and supply chain problems continue to vex them, according to a new survey released by the National Federation of Independent Business.
Fifty-four percent of small business owners did not expect better economic conditions over the next six months, said Andy Patterson, spokesman for NFIB-OHIO, which released the national data. That is up from 50% in April.
The survey of NFIB members was conducted in May.
“Inflation continues to outpace compensation, which has reduced real incomes across the nation,” said NFIB Chief Economist Bill Dunkelberg. “Small business owners remain very pessimistic about the second half of the year as supply chain disruptions, inflation, and the labor shortage are not easing.”
The NFIB Optimism index declined 0.1 points in May to 93.1, which is the fifth consecutive month below the 48-year index average of 98, according to the news release.
Among the key findings in the survey of small business owners nationwide:
■ 28% said inflation was their most important problem, down four points from April’s survey.
■ 51% reported job openings they could not fill.
■ 46% raised compensation.
■ 72% raised average selling prices.
■ 39% said supply chain disruptions had a significant impact.
Nationally, 80% of wholesale businesses raised prices, as did 79% of manufacturers, 78% of retail trade businesses and 77% of construction businesses, the survey found.
Dan Freeman, who owns Le Torte Dolci bakery and Salato Deli on North Fountain Avenue in Springfield and Crust & Company at Cohatch along with his
wife, Lisa, said that inflation has not had a major impact on those businesses to this point. But they have definitely felt the effects. The couple saw a rise in prices coming and were able to take steps such as increasing prices for their food products. Inflation has impacted cost of meat and other items needed to make their food products.
There is also a concern that inflation will impact their customer base as Freeman says that customers may be a little tighter with their money and may not want to eat out as much.
However, the bakery, deli and pizzeria may see less of that due to those restaurants being quick service. Freeman said that during the COVID-19 pandemic, they anticipated a decrease in business for their bakery, but the opposite had happened. Demand for those baked goods had increased.
In regards to higher interest rates, Freeman said they do not anticipate that to affect them in the short term. However, it is unclear what the long term consequences would be depending on the type of interest rates that would be impacted by increases.
In a recent NFIB Ohio survey nearly half of the business owners reported inflation as their chief concern and more than one-third said lack of job applicants was the biggest problem.
“Our members here in Ohio are filled with uncertainty as surging inflation, especially in fuel costs, rising labor costs, and supply chain issues that continue to linger,” said Chris Ferruso, legislative director for NFIB in Ohio.
“In contending with larger competitors, it is more difficult for small businesses to raise their prices, which would price themselves out of the market. It is not hard to see why so many are hesitant to grow. There is just too much uncertainty,” Ferruso said.