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Energy prices threaten business profits

Small-business owners forced to find ways to economize.
Friday, December 2, 2005 | 12:00 a.m. CST; updated 11:52 p.m. CDT, Wednesday, July 2, 2008

John Schopflin, the owner of U.S. Cleaners, says his gas bills have increased by hundreds of dollars during the last four months. His year-round Columbia dry cleaning business relies on a water boiler that runs on natural gas.

“If energy prices keep going up and up, I’ll have to raise my costs,” Schopflin said.

Last year, he slightly raised his one-price dry cleaning fee from $2.19 to $2.50.

“It’s usually not a big increase and you might lose some people,” he said. “But, I think my customers usually understand.”

The issue of how to address rising energy costs among small-business owners in Missouri was one area of concern in a report issued Thursday.

The Missouri Small-Business Conditions report was released by the National Federation of Independent Business, the nation’s largest small-business advocacy organization. The fourth-quarter report was completed after a November telephone survey of at least 350 random small-business owners in the state. A small business was defined as a for-profit organization with between one and 250 employees, excluding the owner.

While large corporations might increase selling prices to accommodate higher energy costs, small-business owners can’t afford to do the same, said Nancy St. Pierre, a NFIB spokesperson.

“It’s not their first choice to pass on the costs to their customers,” St. Pierre said. “They need a consistent and loyal customer base.”

In 2004, more than 461,250 small businesses existed in Missouri, according to the U.S. Small Business Administration’s Office of Advocacy.

The SBA, citing figures derived from the U.S. Department of Commerce, found statewide income for small businesses, excluding farmers, increased from $12.3 billion in 2002 to $13.2 billion in 2003.

“Small businesses contribute a huge amount to Missouri’s economy,” said Brad Jones, the NFIB’s Missouri state director.

Approximately 95 percent of its 13,000 Missouri NFIB members are business owners with less than 15 employees, said Jones.

In Columbia, 80 percent of the Chamber of Commerce’s 1,100 to 1,200 member groups are small businesses with 20 or fewer employees, said Don Laird, the chamber’s president.

“Small businesses are where a lot of your innovation, changes and ideas come from,” Laird said.

At the Cherry Street Artisan, energy increases have contributed to slightly higher utilities bills and increased purchasing prices of its Sysco food products, said Jeremy Brown, general manger.

Kaldi’s, the St. Louis company that delivers the Artisan’s coffee products, also increased its minimum dollar shipping amount.

As winter approaches, Columbia business owner Melanie Karrick will address energy hikes the same way she has in years past. Karrick is the owner of Key Largo Health & Fitness Spa and Key Largo Tanning Salon.

“Typically, we’ve done budget billing,” Karrick said. “The electric company will look at our past yearly use and average the bill.”

Minor adjustments will be made to the business’ thermostat but it will remain between 68 and 70 degrees to accommodate customers.

“People need to be at a comfortable temperature when they’re working out and when they tan,” Karrick said.


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