How does this affect small businesses and their income

By Catherine Hutchison, senior director for Threadsy.com,

Inflation is a measure of rising prices in our economy. Right now, inflation is a priority because most Americans are paying more than they used to for everyday purchases like food, gas, clothing, child care and more. Regular necessities have become far from affordable for some low-income households and this is a pressing issue for many. According to the latest report from the Bureau of Labor Statistics, the annual inflation rate in May was 8.6%, its highest level since 1981, as measured by the consumer price index. The United States is not the only place where people are getting an inflationary boost. A Pew Research Center analysis of data from 44 advanced economies finds that in nearly all of them consumer prices have risen significantly since pre-pandemic times (https://www.pewresearch.org/fact-tank/2022/ 06/15 /in-the-united-states-and-around-the-world-inflation-is-high-and-rising/).

Small businesses are more than ever affected by the rising prices of goods and services due to inflation. Data from MetLife and the US Chamber of Commerce found that 85% of small business owners surveyed said they were concerned about inflation. And 1 in 3 cited inflation as their top business concern (https://www.forbes.com/sites/forbesfinancecouncil/2022/05/25/the-impact-of-inflation-on-small-businesses-and -how-to-manage-it/?sh=2eb4091cae41). According to a Business.org survey, 92% of small business owners surveyed have faced rising costs since the pandemic began. The supplies and services you need to run your business are more expensive, and 26% saw their costs increase by 20% (https://www.forbes.com/sites/forbesfinancecouncil/2022/05/25/the- impact-of-inflation-on-small-businesses-and-how-to-manage-it/?sh=2eb4091cae41).

Small businesses are particularly affected by the inflation that is currently occurring for several reasons. First, the timing couldn’t be worse. After two years of pandemic-related shutdowns and pivots, many small businesses have not returned to pre-Covid sales. Now entering a new phase of post-pandemic recovery, business owners are also having to deal with rising prices. Everything from supplies to rent to salaries has become more expensive, and cost increases for many small businesses far outweigh any price adjustments they can pass on to customers. Finally, as the Fed raises interest rates to slow inflation, it can hurt small businesses by making it more expensive for them to obtain loans and credit. It’s a lot for small business owners to navigate through an already difficult time.

As we know, as the cost of products and services increases, consumers start to buy less and less, therefore, many small businesses see their income decrease due to inflation. Rising costs mean tighter profit margins. Some business owners may opt for a pay cut as part of overall cost management, which reduces their individual earning capacity. Others may see a drop in leading sales as wallets tighten. There are other small business owners who try to raise their prices in order to make a profit to keep up with inflation, which only drives some consumers away from that small business, knowing that they could find “better price” elsewhere. Whether people have their small business as a full-time job or a side hustle, tighter profit margins make it extremely difficult for them to also pay for expenses for food, gas, clothing and more.

Threadsy helps small businesses by providing access to wholesale apparel quantities and prices, with no minimum order or special credit requirements. Being able to obtain smaller quantities of supplies in bulk without a price markup allows small businesses to better manage their cash flow, hold less inventory and in turn offer lower prices to their customers. We have recently seen an increase in orders from small apparel companies as the demand for affordable event T-shirts is on the rise. We’ve also seen an increase in small business orders from landscapers, restaurants, builders and others looking to find low-cost options for employee uniforms and workwear. If we are able to help small businesses increase their profit margin, even slightly, to earn a living wage and increase their revenue, that is our goal. Our customers have told us firsthand how our pricing has made their small businesses manageable and profitable, and we want that to continue for as long as possible. They try to maximize profits by staying small and cutting expenses where possible, and we’re glad Threadsy can help with that.

Authors biography :

Kathryn Hutchison is the Managing Director of Threadsy, one of the nation’s leading online retailers for virgin apparel. She joined Threadsy in 2021, leading the launch of the business and achieving significant growth in the company’s first year. Prior to Threadsy, Hutchison held several leadership positions in marketing and e-commerce at RetailMeNot and Whole Foods Market.

When she’s not hard at work selling shirts, Hutchison loves trying new DIY decorating techniques at her home in Austin, Texas. Her current favorite t-shirt is the Next Level Apparel Women’s Triblend Dolman T-Shirt (style 6760) in Vintage Navy, perfect to wear to cheer on the Dallas Cowboys.

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