How Small Businesses Can Deal With Inflation, Supply-Chain Issues
American consumers dealing with skyrocketing prices are hardly alone.
We recently detailed a National Federation of Independent Business (NFIB) report showing that inflation is the top concern among small businesses. That backs up the insights from an earlier report, this one by the U.S. Chamber of Commerce and MetLife, which also details how supply-chain problems have been a particularly painful headache, too.
Small businesses don’t have many options for alleviating these economic migraines. But there are some measures they are taking to reduce the pain.
Two Major Problems for Small Businesses
In a special report by the U.S. Chamber of Commerce and MetLife, published in March, 85% of small business owners said they’re concerned about the impact of inflation on their business. That’s a high number to begin with, but also a sharp uptick from Q4 2021’s 74%.
And all told, 33% of small business owners ranked inflation as their top concern. That’s a little higher than the 28% of small business owners who told the NFIB the same thing in May.
Some other inflation-related stats:
- 44% of small business owners or decision makers said they were “very concerned,” up 13 points from Q4 2021.
- 76% said managing higher inflation-related costs is difficult.
- 74% said rising prices have had a “significant” impact on their business over the past year.
However, these owners also had another challenge high on their list. Twenty-six percent of those surveyed said supply-chain issues were at the top of their list.
A much larger percentage of small business owners (76%) expressed some level of concern about the impact supply-chain problems were having on their companies. Some 65% said it was difficult to manage supply-chain disruptions.
So … what have small businesses been doing in response?
How Small Businesses Are Coping
The most obvious remedy for small businesses facing rising prices is to raise their own prices in response. And that’s what small businesses have been doing, with a little more than two-thirds of owners reporting they’ve hiked prices over the past year.
Also, 41% said they’ve shrunk their staffing, while 39% said they had to take out a loan.
Of course, the extent to which small businesses are going to these lengths largely depends on the industry. According to the U.S. Chamber of Commerce and MetLife report, larger small businesses (20-plus employees) have been more likely to cut staff or take out a loan than even smaller firms. A high 80% of retail-sector small businesses have raised prices; a much smaller percentage (56%) of services companies did the same.
On the supply-chain side, 61% of small businesses said that they altered their supply chain during the previous six-month period. That’s not far off from the previous quarter’s 63%.
Unfortunately, small businesses have far fewer ways of dealing directly with supply chains. Changing vendors is one of the most straightforward ways, but other short-term remediations include changing up product/service mix, buying direct from manufacturers and making sure your customer service skills are on point.
Fight Back Against Today’s Toughest Headwinds
McManamon & Co. is an accounting, tax, fraud, forensic and consulting firm that offers custom services to companies across a broad spectrum of industries. And we can aid small businesses struggling with inflation and supply chain issues in myriad ways, from tax services, including developing cash-saving tax plans, to consulting services on topics such as hiring, strategic planning, choosing vendors and cash-flow planning.
Learn more about what we can do for your small or midsize business. Call us at 440.892.8900 or contact us online today.
Tags: McManamon, small business, small business finances, small business owner, supply chain | Posted in McManamon & Co., small business, Small business finances