Understand the Economic Challenges of Your Small Business Customers

Here is something to remember – this is what your small business customers are going through, with higher materials prices, higher energy costs, and the aftermath of hurricanes:

Most small firms are absorbing higher delivery charges and materials costs instead of passing them on to their customers by raising prices, according to a monthly survey of small business owners.

That could change if energy costs remain high, says William Dunkelberg, chief economist for the National Federation of Independent Business.

NFIB’s survey of small business owners found that 27 percent reported higher selling prices in August, down two percentage points from July. Ten percent cut prices.

The survey, which was taken before Hurricane Katrina, found that overall small business confidence remained strong. NFIB’s index of small business indicators dipped only 0.2 points.

“Katrina does put a wrinkle in the outlook,” Dunkelberg says, “but the survey data indicate strong third and fourth quarters.”

Yet, despite feeling squeezed by rising prices, and despite the challenges, U.S. small businesses remain optimisitic.