Here on PEI, we are familiar with the tides. In the summer, we check the tides before heading to the beach to ensure we can get the best beach experience, and our fishermen make their living riding the tides to the best fishing grounds. In the same way that the position of the tides can affect our decision making in our everyday life, in the business world we must also learn to ‘ride the waves’ in a manner of speaking. We need to find a way to navigate through the highs and lows associated with the current economic conditions, and just like the ocean waves are felt more keenly in a small vessel as opposed to a large ship, the economic waves are often felt more keenly by our smaller businesses.
Inflation is being felt everywhere, from Fortune 500 companies to solo-preneurs just starting out. However, the difference between large-scale companies and smaller ones are their reserves. According to JP Morgan Chase, the average small business runs with only 27 days of operating expenses in reserves. Increases in utilities, goods and services, real estate, and gas costs; supply chain issues impacting delivery; and employee shortages have taken a toll on all businesses, but especially our smaller ones.
In this challenging time, while you are dealing with your own concerns over stretching your pay cheque, we want to share some things you might not realize.
Small Business Pricing Stats:
- 91% of small businesses said they have been negatively impacted by rising costs, supply chain, and workforce challenges, up from 86% in January 2022
- 73% said increasing energy costs are negatively impacting their bottom lines
- 74% are currently hiring, 90% are finding it difficult to fill the positions
- 67% have increased wages to keep/attract employees
- 42% have lost employees to larger companies
- 75% are seeing a rise in their operating costs, yet only 40% are raising prices
Let’s repeat that last one. Three quarters of small businesses are seeing a rise in their costs but less than half have raised prices. Costs are going up. These businesses have held out as long as they could. Soon those that haven’t already will raise their prices. It’s inevitable. Before you react to this, please consider…
Responding to Increased Prices
Businesses need our support, and they need our patience. Raising prices is a last resort for many small businesses because they are very close to their customers. They don’t want to pass on their costs. They know customers have their own pricing concerns and their pay cheques are not going nearly as far as they used to.
You may see closures on days the businesses used to be open or experience limited hours to help with staff shortages. Be understanding of this. By limiting their hours, they are trying to remain in business and cover the employee shortage they’re facing.
Businesses may reduce the services they offer or the secondary costs. Bars, for instance, may cut back on bands to save money. Table your complaints. They’re doing the best they can right now to make enough profit and cut costs to stay in business.
This may seem like a bleak picture for small businesses, but we have had some wonderful success stories over the past year as well. For example, take our new business of the year award winner Home by Caley Joy, or the recent announcement of expansion from our Business Excellence (1-10 Employee) winner, Quannessence. There are new businesses growing. People are starting their own successful enterprises even through these tough times.
Business owners are resilient, hardworking, problem-solvers. People who go to work for themselves believe in the service or product they provide. As the saying goes, entrepreneurs would “rather work 80 hours for themselves, than 40 for someone else.” We have faith in business owners and we’re doing our best to help by giving them the resources to work through these extraordinary challenges, but we need your help.
Bottom Line
Small businesses need you to:
- Show up. Keep supporting them.
- Support them. If not through purchases than through reviews, word-of-mouth, or referring someone looking for work.
- Pass the message along. Remind others what businesses are going through. It’s stressful wondering how you’ll make payroll, pay your suppliers or your landlord.
Small businesses are the backbone of our business community, and if Summerside is going to continue to thrive, we need to continue to support our local business owners. Together we can ride out any storm.