Some small business owners are pointing their fingers at one big macroeconomic change that has left them feeling more pessimistic about their futures than ever.
“The rising cost of goods is out of this world at the moment. I can’t afford to raise my prices any more than I already have,” Stephanie Coco, owner of Steph’s Creativity Corner, said on “The Bottom Line” Monday.
“Our cost of goods has increased 20 to 40% depending on which items you’re purchasing, and the customers aren’t really following that trend,” Just Baked Bakery & Deli owner Katlyn Swaffer added. “They’re not willing to pay 20 to 40% more now than they were four years ago.”
Rising everyday costs and seemingly sticky inflation have left these business owners struggling to cover costs, making it one of the “hardest” years of operation.
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Their concerns were echoed by the recent Small Business Optimism Index from the National Federation of Independent Businesses (NFIB), which reported a decrease in March by 0.9 of a point to 88.5, which is the lowest reading since December 2012 and marks the 27th consecutive month with the index below the 50-year average of 98.
One-fourth of small business owners said inflation was the most important problem in operating their business due to higher input and labor costs – up two percentage points from February and one percentage point from 24% a year ago.
“I have a really good relationship with my customers, and I feel that if I continue to raise my prices, they’re going to be looking elsewhere and going for the easy fix like Amazon, Walmart or Target,” Coco said.
“So I need some type of relief in that area so I don’t have to continue to raise my prices as a small business,” she continued, “and the only toy store on Staten Island.”
“I don’t really feel like this economy that we’re in is very favorable towards small businesses, and it’s not favorable to support local either,” Swaffer chimed in. “The large grocery stores, they can sell a cake for a lot cheaper than I can sell a cake.”
In line with concerns about inflation, the percentage of owners who reported that they raised average selling prices rose by seven points from February to a net 28% on a seasonally adjusted basis. The net percentage of small business owners who said they expect real sales to be higher decreased by eight points from February to a net negative 18%.
Currently, in her ninth year as an owner-operator, Coco claimed she’s had to flex her creative muscle as an artist more than ever to mitigate inflationary pressures.
“Add more personalization, offer free gift wrapping to pull in my customers to make it more enticing for them to come to me, rather than the big box stores that are getting a much bigger break,” she explained.
“It’s hard for small businesses because people want it instantly. And as a small business, it’s just my mom and I, with my dad helping out occasionally,” Swaffer added to the argument. “And we also have a deli, so I can’t pop out a cake in five hours or whatever people are wanting.”
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FOX Business’ Eric Revell contributed to this report.
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