My little business certainly does not qualify as a bellwether to the U.S. economy, but when all my small bidness owner friends get together and moan and groan about how high energy costs are cutting into our bottom lines, I can’t help but think that the economy is about to crack under inflationary pressures. Up until now, every business owner I know has been swallowing the increasing costs, which is smart under ordinary circumstances, because under ordinary circumstances energy prices rise and fall, thereby creating an overall predictable baseline for profit margins. But circumstances have changed.

The problem is, most bidnesses are still operating under old baseline assumptions and they’re realizing this… I’m realizing this. I can’t speak for the larger forces that have a more direct impact on our nation’s economy, but I can speak for myself and my small bidness owner friends: We have to raise our prices. I’ve decided to introduce price increases that will be effective January 1, 2007. I’ll still be suckin’ up the fuel sur-charges, increased shipping charges, etc. for the rest of the year, but at least it’s only for six more months.

I worry, however, as most small business owners do, whether or not people will still purchase my products at the store? When they see a jar of my sauce has moved above the $4 price point, which I’ve had for eight years now, will they be less inclined to purchase it? I mean, $3.99 has been a great deal. I get e-mails from happy customers confirming this. It’s been a selling point. But everyone is going to be forced to increase prices, so perhaps in relation to those other price increases my products will still look good.

On the other hand, customers may begin to feel fatigued by overall increases in every sector of the economy. How can business owners give raises or salary increases to their employees when they’re already taking big hits to their bottom lines due to increased energy costs, something their employees are also taking a hit on in their personal lives?

Something has got to give, and it’s not going to be easy. Unfortunately we don’t have a visionary energy policy in place that can prevent painful economic inflation. We’ve all been the little lab frogs contently and unknowingly sitting in the ever increasing water temperature. Will we let ourselves sit there until it boils? If a little bidness owner like myself can figure out that simple equation, why can’t our nation’s decision makers?

This entry was posted on Friday, June 16th, 2006 at 10:54 am and is filed under Economy, Energy Future. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.