It’s been a tough few years for small businesses in Ohio, and owners don’t think things will change anytime soon.
When my association, the National Federation of Independent Business, surveyed its members in Ohio last month, we found that about 60% of them think economic conditions will get worse before they get better.
Perhaps the biggest issue facing high street businesses at the moment is inflation. When we asked our Ohio members, nearly half cited inflation as the biggest issue affecting their family businesses.
Inflation is not a new problem. The whole world has been struggling with this since the summer of 2021, but it has been especially hard for small companies.
Unlike large corporations, small businesses are not sitting on piles of cash. When the cost of everything from raw materials to shipping pallets to shopping bags rises, small businesses can’t afford to absorb the extra costs. They really have no choice but to pass those increases on to their customers, which is one of the factors that has led to the worst inflation we’ve seen in decades.
Over 73% of Ohio businesses surveyed by the NFIB reported a price increase in the past three months. Almost one quarter of them had to raise their prices by more than 10%.
The No. 2 issue affecting Ohio’s small businesses—and the prices they charge their customers—is labor.
The survey says that 47% of owners had positions they could not fill in the past three months because they did not receive enough qualified candidates.
Small businesses try to attract more job applicants by offering higher wages. Half of the owners surveyed have raised wages in the past three months, and half expect to pay more in the first quarter of 2023. They don’t want to, but employers often have no choice but to raise prices a little more to compensate workers for higher wages.
Of course, these problems are not unique to Ohio.
The latest NFIB Small Business Optimism Index shows that Main Street businesses across the country are facing the same issues in similar ways. That means owners are putting expansion plans on hold, keeping outdated equipment if they can, and doing whatever they can to provide the same level of service with fewer employees.
Inflation and supply chain disruptions are global issues, but the workforce is mostly local, and it’s worth noting that only 15% of Ohio small business owners surveyed need workers with a college or graduate degree. More than three quarters are not hiring for any position that requires a degree.
The reliance of Ohio’s small businesses on workers without degrees underscores the need to reform the state’s education system. We need to put more emphasis on preparing people for technical and skilled trades and break down the barriers workers face in the state licensing process.
There are many opportunities in Ohio to earn a great living without a degree. The NFIB looks forward to working with the Ohio Legislature and the DeWine administration in the coming year to increase opportunities for more Ohioans to do just that.
Roger Geiger is the Ohio Executive Director of the National Federation of Independent Business.
