Michigan Economy Hits Small Businesses

Last year this time the national unemployment was just under 5 percent and many small businesses posted increases.  Small business owner’s biggest complaints last year were sky rocking healthcare costs and a shortage in good workers.

Fast-forward to summer of 2008 we are being hit from every direction, a housing slump and rising material costs and the $4.00 per galloon gas prices, almost $5.00 per gallon for diesel fuel.

Small business owners from across the country met recently in Washington for the National Federation of Independent Business (NFIB) annual summit.  They found that U.S. businesses were filing bankruptcy at a faster rate than consumers across the country.  A record was set April of this year with over 5,000 businesses filing for bankruptcy, year to date over 13,000 have filed.  Only 9,000 businesses filed in 2007, which is an increase of 44 percent.

With consumers spending less and the 106 percent increase in energy prices since last year, small businesses are being hit harder because their profit margins are generally less than the larger fortune 500 companies.  Many small Michigan businesses as well as businesses across the country can not raise their prices to make a profit.  In a very competitive market you have to keep your prices sharp, many are operating at cost or are losing money with no end in sight.

One Pennsylvania sandwich shop owner stated he is losing money every month, just about $1,000 for the last three months in a row.  Beef prices are up 20 percent, Canola Oil is up 160 percent, flour is three times the cost is was last year.  Then on top of those increases his suppliers are adding on fuel surcharges for delivering the products he sells.

Being a small business owner here in Michigan I too have seen increases in materials.  Cotton prices are on the rise, making profit margins for screen printed t-shirts even less due to a very competitive market.  Many of our suppliers are coming out with mid-year catalogs due to the hefty price increases they have seen from China.  Items like Coffee Mugs, Pens, Koozies that are being produced overseas then printed here in that states are slated for the mid-year increase.

These increases are going to hurt my business even more here in Michigan.  Being a promotional products distributor I am lucky that I can provide customers all over the country with custom printed promo items.  Looking at my sales year to date over 60% is out of state, but the local Pizzerias’ and Auto Repair Shops are not as fortunate.

Something has to turn-a-around soon as posted here – small businesses in Michigan employ over 2 million people, small businesses are an important factor in this country’s survival and if our government does not make this a priority soon many more small businesses will go under and the unemployment rate will go up.

Tim Somers
MichiganBusinessHub.com