93 percent of owners said inflation is having a moderate to substantial impact on their businesses
NFIB State Director Annie Spilman has submitted written testimony to the state Senate Finance Committee explaining that inflation has taken a tremendous toll on the state’s small businesses.
Spilman writes that a recent NFIB survey showed 93 percent of owners said inflation is having a moderate to substantial impact on their businesses.
“Inflation is affecting the cost of everything, from raw materials to transportation,” Spilman said. “Small businesses have little choice but to raise prices for consumers, but 84 percent of small business owners nationwide say earnings are down because of the higher cost of doing business.
“Our hope is that the Senate Committee will continue to work with the business community to find ways relieve some of the financial pressure on employers so they can get through this difficult period,” Spilman said.
Here is Spilman’s written testimony:
TO: Senate Finance Committee
WHAT: May 4, 2022, public hearing regarding inflation and the effect on the business community in Texas.
Small business owners first signaled inflation issues in the summer of 2021 when NFIB’s Small Business Economic Trends (SBET) survey found increasing numbers of small business owners reporting “inflation” as their single most important problem.
In April of 2022, the NFIB Research Center released a new inflation survey that showed 93% of owners report inflation having a substantial or moderate impact on their business (a 40-year high), all while 84% of small business owners reported lower earnings. Read the press release here.
Key findings include:
Specific costs
- Owners reported that “inventory, supplies, and materials” and fuel (gasoline, diesel, fuel oil, etc.) are the top contributing factors to higher costs in their business.
- Over three-quarters (77%) of small employers reported inventory, supplies, and materials as being a substantial contributor to higher costs, while 18% reported moderate.
- Over three-quarters (77%) of small employers reported that rising prices for fuel (gasoline, diesel, fuel oil, etc.) is a substantial contributor to higher costs.
Absorbing costs
- The main tool small employers have to absorb inflation pressure costs is to raise prices for goods or services, passing higher input costs on to their customers.
- 86% of small employers are increasing the price of their goods or services.
- 84% reported experiencing lower business earnings to some degree.
Prices
- 68% of small employers are planning to raise average selling prices in the next three months and 22% were not sure.
Energy and gas costs
- Nearly all (99%) of small employers reported the recent increase in gas and fuel prices is having some degree of negative impact on their business.
NFIB’s March 2022 SBET survey found that with inflation, an ongoing staffing shortage, and supply chain disruptions, small business owners remain pessimistic about their future business conditions — the lowest level recorded in the 48-year-old survey. Currently, inflation is dominating business decisions for small business owners across the country.
