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How small businesses are battling inflation and recession fears

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Isabel Garcia Nevett is adjusting her business again.

After weathering the pandemic and dealing with rising inflation, she’s now pondering how Miami-based chocolatier Garcia Nevett Chocolates can weather a possible recession.

She worries about cutting spending, as her small business growth is linked to giving gifts to businesses.

Garcia Nevette, who runs a chocolatier with her sister Susana García Nevette, said, “Every company that wants to do business looks at their budgets and doesn’t do as much, and that directly affects us. sho,” he said.

To address these concerns, the sisters plan to offer cheaper options to both corporate and retail clients of their stores. Compare availability, quality.

Buying more chocolate and supplies is another way to keep costs down. To increase foot traffic, businesses are launching in-store coffee menus.

Garcia Nevette isn’t the only one who fears a recession.

A Goldman Sachs survey found that 93% of small business owners fear the US economy will enter a recession within the next 12 months. The survey of 1,533 Goldman Sachs 10,000 Small Business Voice participants was conducted June 20-23, 2022 by Babson College and David Binder Research.

In addition, 38% of respondents feel that customer demand has decreased as a result of inflation-driven price increases for goods and services.

Joe Wall, National Director of Goldman Sachs 10,000 Small Businesses Voices, said:

In other words, they see economic trends before most people.

“They see no end in sight in terms of things getting better,” Wall said.

A previous CNBC|SurveyMonkey small business survey in May found that the vast majority of small business owners are preparing for a recession.

fight against inflation

Nearly all prices have increased in the last few months. Consumer prices rose 9.1% year-on-year in June, while wholesale prices rose 11.3%.

A Goldman survey found that about 75% of small business owners say inflation is hurting the health of their business.62% of them increased wages in response to inflation 43% sought new vendors or suppliers to retain employees and reduce costs

Also, high prices had to be passed on to customers. But the small business owner has a tough road between dealing with rising costs and retaining customers, with 53% limiting price increases to less than 10% of his.

Garcia Nevett did so reluctantly when faced with higher costs, but her customers understood.

Now she’s holding her breath to see how the rest of the year goes. She’s even put plans for a bigger kitchen on hold.

“I’d love to see how the holiday season goes,” said Garcia Nevette. “It’s hard to make long-term plans today.”

look to Congress

Garcia Nevett is one of several small business owners meeting lawmakers at the Goldman Sachs 10,000 Small Business Summit in Washington, DC this week.

They will advocate for solutions to the challenges they face and will seek reauthorization from the Small Business Administration for the first time in over 20 years.

“It’s been long overdue for the government to modernize its policy infrastructure to support small businesses,” Wall said.

Through it all, business owners remain hopeful.

78% said the economy has deteriorated in the past three months, while 65% are optimistic about the financial trajectory of their business this year.

“The raw resilience of the small business community is amazing,” says Wall. “They are arguably the most creative gene pool in the country, capable of turning in an instant and weathering the storm.”