40% of Small Business Owners Intend To Raise Prices Due to Inflation
With inflation at a 41-year high, small business owners continue to face numerous challenges, including rising input costs resulting from supply chain disruptions, staffing shortages and soaring fuel costs. Now, 40% of these small business owners say they intend to raise their prices between 5% and 10%, according to a new survey.
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The National Federation of Independent Business (BFIB) survey highlights the impact of inflation on small employer businesses and how they are responding to cost increases.
Indeed, the survey finds that these inflation pressures are pervasive across the small business sector, with 62% of business owners reporting that inflation is having a substantial impact on their business while 31% reported a moderate impact. Only 6% reported a mild impact and 0% reported no impact, the survey notes.
When small employers were asked what is contributing to higher costs in their business, 77% of them reported “inventory, supplies, and materials” as being a substantial contributor and 77% reported that rising prices for fuel were also a substantial contributor to higher costs.
In turn, to absorb or cover these cost increases, 86% of small business owners say they are increasing their prices, 21% say they are reducing the number of materials or goods used to produce the final products and 26% say they are switching to lower-cost materials or goods to produce the final products.
In addition, 21% say they are taking on debt to help finance higher costs and 28% say they are reducing employee-related costs, such as compensation and the number of employees.
In terms of raising prices, a staggering 68% of them say they intend to do so in the next three months. Of these, 40% say they will raise prices between 5% and 10%, while 26% say they will raise prices between 3% and 4.5%.
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