Isabel Garcia Nevett is once again making adjustments to her business.
After navigating the pandemic and dealing with rising inflation, she is now thinking about how her Miami-based chocolatier, Garcia Nevett Chocolates, can weather a potential recession.
As her small corporate gifting business grows, she’s worried about cutting back on expenses.
“All those companies that we’re hoping to do business with are going to review their budgets and not do as much, and that’s going to affect us directly,” said Garcia Nevett, who owns the chocolate bar with her sister. Susana Garcia Nevett.
To address these concerns, the sisters plan to offer some less expensive options to both their corporate and retail customers at their store. They are also looking for new vendors and suppliers for their packaging and comparing prices, availability and quality.
Buying more chocolate and supplies is another way to cut costs. To increase foot traffic, the business is launching an in-store coffee menu.
Garcia Nevett is not alone in her fears of an economic downturn.
Fully 93% of small business owners are concerned that the US economy will experience a recession in the next 12 months, according to a survey by Goldman Sachs. The survey of 1,533 Goldman Sachs 10,000 Small Business Voice participants was conducted by Babson College and David Binder Research from June 20-23, 2022.
Also, 38% of the respondents have seen a decrease in customer demand as a result of the inflationary increase in the prices of goods and services.
“What we’ve found is that small businesses are at the forefront of business cycles,” said Joe Wall, national director of Goldman Sachs 10,000 Small Businesses Voices.
In other words, they spot economic trends before many others do.
“They don’t see an end in terms of improving things,” Wall said.
A previous CNBC|SurveyMonkey small business survey from May found that the vast majority of small business owners were preparing for a recession.
The last few months have brought higher prices for almost everything. Consumer prices rose 9.1% year-on-year in June, while wholesale prices rose 11.3%.
About 75% of small business owners said inflation negatively affected the health of their business in the Goldman survey. Of them, 62% increased salaries in relation to inflation to retain employees and 43% sought new vendors or suppliers to reduce costs
They have also had to pass on high prices to their customers. However, small business owners are walking a fine line between dealing with their rising costs and keeping their customers, with 53% raising prices by less than 10%.
That’s what Garcia Nevett reluctantly did when faced with higher costs, and she found her customers were understanding.
Now she’s holding her breath to see how the rest of the year plays out. She has even put plans for a bigger kitchen on hold.
“We want to see what the holiday season will be like,” Garcia Nevett said. “It’s hard these days to really plan for the long term.”
Turning to Congress
Garcia Nevett is among the small business owners meeting with lawmakers this week during the Goldman Sachs 10,000 Small Business Summit in Washington, DC
They plan to advocate for solutions to the challenges they are facing and ask them to reauthorize the Small Business Administration for the first time in more than two decades.
“It is long overdue for the government to modernize the policy infrastructure that supports small businesses,” Wall said.
Through it all, business owners remain hopeful.
While 78% said the economy has worsened in the past three months, 65% are optimistic about the financial trajectory of their business this year.
“The raw resilience of the small business community is nothing short of remarkable,” Wall said. “They are definitely the most creative gene pool in the country, being able to pivot at the right moment and weather the storm.”