In a recent poll, 61% of small business owners said they’re struggling in the current economy. To stay ahead of inflation, US businesses have raised their prices by as much as 27% in the past 12 months.
Are you worried about rising costs and their effects on your place of business? What are other small business owners doing to battle the effects of inflation?
Keep reading below as we discuss this important topic.
US Inflation: How Bad Is It?
A global pandemic, a change in presidency, and now a war in Europe are creating upheaval in our economy. Between the first quarter of 2021 to the first quarter of 2022, the annual inflation rate rose by 7.8%.
The US hasn’t seen inflation levels like these since the early 1980s. In fact, for the first time since 1981, polled business owners say that inflation is their number one challenge.
This comes as no surprise since 92% of small business owners report that the cost of supplies they need to run their business has increased since the pandemic began. Combined with the soaring costs of medical care, fuel, and food items, the situation is worrying for many small businesses.
The Effects of Inflation on Small Business Owners
To combat the rising costs, small business owners are adjusting their pricing strategies. Nearly half of all businesses report raising their prices by 45%.
Here are some other key findings from a recent survey:
- 60% of owners worry about the financial health of their business
- 47% are seeing decreased profit margins despite price increases
- 37% have had customers complain about inflated prices at their business
- 30% fear that higher prices will deter customers from using their business
How are business owners reducing their overhead during these times? Some are reducing their inventory or the number of employees, while some are cutting back on their marketing budget. Many businesses have moved to a cheaper workspace or hired an accountant to help them save more money.
For other businesses, their primary concern is hiring new staff or retaining current employees. They worry about their ability to offer good employee benefits or find the balance between higher prices and higher salaries.
Many employers are being forced to think outside the box when it comes to how to deal with inflation. For example, one business owner has several employees who commute over an hour each way to work. To help them with soaring fuel costs, she gave them gas gift cards as well as a salary increase.
Employee Benefits During Inflation
The effects of inflation are presenting challenges across the board. As we ride out this current wave of US inflation, you may need to get creative with pricing strategies, marketing costs, and employee benefits.
Of course, one area where you can’t afford to cut corners is with your employer-sponsored health insurance.
At D2E, we connect employers to healthcare plans that fit their needs — and their budgets. We work with providers to negotiate discounted rates, allowing you to offer affordable health plans to your employees.
Call us at 1-844-220-8056 or use our contact form to set up a consultation.