First Person: How Rising Energy Costs Hurt Small Businesses

Often, when we hear about rising energy costs, we hear about how rising energy costs hurt small businesses. The average person might think that rising energy costs would just add small expenses to small businesses in regards to the energy bill. In actuality, there are many areas in which a small business will feel the sting of rising energy costs.

Utilities

As a stated before, most people only think of utility costs increasing for small businesses when we are faced with rising energy costs. You will soon find out many more reasons why rising energy costs hurt small businesses so much.

Supplies

Rising energy costs will usually add to the costs that businesses have to pay for basic supplies. Paper and ink are just two types of basic supplies that can be affected by rising energy costs. The companies that make and sell these products have to make sure that they keep their profit margins, so they usually find that they have to turn their higher costs over to their customers.

Shipping

One of the largest increases that can come to a small business comes in the form of shipping. Shipping companies occasionally raise their rates when the price of gas goes up. If a small business gets a lot of shipments, the change can be crippling.

Merchandise

Retail companies are usually hit hard when it comes to rising energy costs. Companies that produce clothing in the United States often have to deal with rising energy costs to run their production machines. These companies then have to face the dilemma of shirking their profit margin, or turning the increased price over to their retailers.

Travel

Any small business that has employees that travel find another way in which they have to deal with rising energy costs. Increases in gas will cause for higher reimbursement costs for employees that have to drive long distances or fly. Sometimes, hotels have to increase their costs temporarily due to higher energy bills as well, and this ultimately comes out of the pockets of small business travelers.

Employees

Some companies find that they have a harder time retaining employees that have to drive long distances to get to work when faced with higher energy prices. Rising energy costs might cause a good employee to look elsewhere for employment to reduce the amount that has to be paid each month to gas up the car.

Consultants

If a small business needs a consultant to help with the business, rising energy costs will play another type of role. Most consultants will figure in hotel stays, airfare, gas, and car rental in with their fees. This is one of the many reasons for increasing consultant fees across the United States and Canada.

Local and State Taxes

Often, when faced with rising energy costs, local governments and states find that they have to increase small business taxes because they have to also deal with the rising energy costs in the same way as small businesses. Remember that governments have to pay many of the same kinds of bills that I have mentioned previously for small businesses.

Customer Loss

To deal with rising energy costs, many small businesses find that they have to increase the price of their merchandise, fees, or services to stay in business. This can often result in the loss of customers due to price increases. This, perhaps, is the scariest of all of the ways that small businesses are affected by rising energy costs.

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