Rising Energy, Fuel Costs Are Big Issues for Small Businesses
Rising energy costs transformed from expenses that were simply
passed along to customers to the single greatest issue impacting
small businesses, according to a nationwide poll of small-business
owners and managers by the International Profit Associates Small
Business Research Board (Buffalo Grove, Ill.).
“Unquestionably, the most significant trends are those
related to the impact of rising fuel and energy costs, regardless
if the cause is from actions in the Middle East or from supplier
problems at home,” said Gregg Steinberg, president of
International Profit Associates Inc., a privately held management
consulting firm for small- and medium-size businesses.
Energy and fuel costs had the biggest impact on 15 percent
of survey participants, while cost of materials was the biggest
factor for 13 percent, according to the IPA SBRB survey.
“As of late 2005, energy and fuel costs hadn’t
appeared on any previous IPA SBRB list of most significant
small-business concerns,” Steinberg said. “However,
energy and fuel showed up for the first time at the beginning
of 2006, tied with finding quality employees for second at
13 percent of the respondents behind the leading category—general
economic conditions.
“We saw a trend during 2005 in which more small businesses
in each reporting period said they were passing along the
increased energy and fuel costs,” he added. “In
the spring of 2005, 64 percent of small businesses were passing
on increased energy and fuel expenses. By summer 2005, the
number of small businesses passing along the costs rose to
72 percent and by year-end, the number had escalated to 85
percent.”
The survey, which tracks the confidence and views of small-business
owners on economic and business issues, also found:
• Small businesses are not adequately prepared for a disaster.
Only 26 percent of respondents had a plan for handling emergency
situations—up 5 percent from November 2005.
• Small-business owners have differing opinions on raising
the minimum wage. Almost half (45 percent) support an increase,
27 percent oppose an increase and another 27 percent remain
undecided.
• Small-business owners are divided about the future of the
estate tax. Nearly a third (31 percent) want it abolished,
22 percent want it changed, 27 percent want it to stay the
same and 19 percent remain undecided.
The IPA SBRB Small Business Confidence Index, which measures
expectations about revenue growth, the general economy and
hiring in the next 12 months, decreased during this same period.
It stood at 39.3, down nearly 20 percent from 47.3 in April
and 52 at the beginning of the year. By comparison, the index
stood at 55 at the beginning of 2005. [November 2006 PET AGE]
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