Business owners in Citrus County and the nation are being forced to raise prices and make other adjustments as inflation continues to escalate.
They are saddled with higher supply costs than even six months ago.
Most small business owners (62.7 percent) report lower profits than expected over the past six months due to declining sales and higher expenses as inflationary pressures rise, according to new survey data from SCORE, mentors to America’s small businesses and a resource partner of the U.S. Small Business Administration.
Rising costs are causing cash flow problems for 35.9 percent of small businesses, according to the SCORE survey.
Jim Green, co-chairman of SCORE Nature Coast, which serves Citrus and Levy counties, has no doubt the national survey reflects Citrus County’s business climate.
One telling statistic which leaps out, he said, is that more than half (54.8 percent) of small business owners surveyed found it necessary to increase prices to compensate for rising costs. On average, businesses reported increasing prices by 11%.
Others report targeting more profitable clients and customers (39.6%), while 28.8 percent have changed their product mix.
By definition, Green said every business in Citrus County is a small business because they have less than 500 employees.
Inflation, he said, has a trickle-down effect. Small-business owners pass higher costs along to their suppliers, who must raise costs and so on down the line. Eventually, it filters down to consumers with higher-priced goods.
“It’s a difficult cycle to get under control,” he said.
Green said the survey doesn’t even mention the problem small-business owners have of finding enough workers. That, in itself, is a huge problem because now owners either must cut hours or incur overtime costs to get the product out.
SCORE’s Spring 2022 Megaphone of Main Street: Inflation & the Economy report surveyed more than 1,000 small businesses on the current state of inflation; how turbulent economic factors have affected profitability, and what they have done to protect their businesses in response.
Only 15.5 percent of small business owners reported profits higher than expected, meaning slower sales and increasing expenses are impacting small businesses across the country.
Here are some other takeaways from the report:
Vendors and suppliers are charging 65.7 percent of business owners more than they were six months ago
More than half of business owners (53.5 percent) now pay more for utilities, including gas
One-third of business owners need to increase their own compensation due to higher personal expenses
23.4 percent say customers are demanding lower prices
22.7 percent say current employees are also asking for pay raises due to higher costs
State Rep. Ralph Massullo, R-Lecanto, spoke last week to business owners at the Citrus County Chamber of Commerce luncheon about the 2022-23 tax package included in the 2022-23 state budget.
Massullo outlined two measures designed to help business owners:
A sales tax exemption on farm trailers and fencing used for agriculture.
An exemption on loans from the federal government in response to a state of emergency from the documentary stamp tax.