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Small Businesses Worry About Bottom Line

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By MICKEY MEECE

New York Times News Service

Published: August 4, 2008

It has been a bruiser of a summer for small businesses that must use the roads every day.
Gasoline prices may have moderated a bit lately, but business owners are still smarting from the run-up in prices this year.

John Nicholson, owner of Company Flowers & Gifts Too in Arlington, Va., was on Capitol Hill last week to tell members of Congress how his business has had to absorb higher costs.

"Higher gas for our van alone runs more than $12 per delivery," he said, though he added that so far he has kept delivery charges at $9.50. "We don't want to discourage our customers from sending flowers."

Still, he added, "after a while I guess we'll have to raise prices."

Plumbers, contractors, data couriers, florists, limousine companies and other small and midsize businesses that rely on driving are adapting to a volatile landscape in different ways - whether through higher prices or creative, long-term fixes.

"As the economic outcome remains uncertain, small-business owners are searching for innovative ways to reduce expenses and increase sales," said Bruce D. Phillips, senior fellow at the National Federation of Independent Business Research Foundation.

Trying To Predict The Future

In fact, the business owners say they are glad to make adjustments before the next problem arises. "You can only see into the future so much," said David Rosenthal of Rosenthal Plumbing in Santa Cruz, Calif.

Every six months or so Rosenthal tries crystal-ball gazing when it comes to fuel prices. If he's wrong about how much it will rise - as he was this time with his recently published price list of services - then his company has to offset the difference. "I don't want to inflate prices to where it's uncomfortable to our client base," he said.

So Rosenthal Plumbing adopted global positioning system technology this summer to track its fleet of service trucks so it can deploy them more efficiently and increase the number of jobs technicians can handle in a day. It will soon install mobile navigation devices in each truck so that employees can find the fastest routes and save fuel.

The high gas prices this year cemented a decision by Sam's Limousine and Transportation in Houston to head in a new direction. It decided to sell its last two limousines, which seat eight. Replacing them are other vehicles to transport passengers, including party buses, sport utility vehicles and Town Cars.

The party buses seat 16 to 20 passengers and have, according to the company's Web site, "soft, black leather couch seating, a mirrored stargazer ceiling, opera lighting, laser lighting, strobe lighting, DVD screens and a custom stereo and sound system."

Higher Costs Bring More Pressure

What small-business owners say they fear is that they will lose customers because of higher costs, putting even more pressure on their bottom lines. In a recent survey by American Express, the percentage of business owners reporting that they have lost sales, for reasons such as an inability to deliver an order, has doubled to 35 percent from 17 percent last fall.

The semiannual telephone survey of a representative sample of 621 owners this spring found that small-business owners are being squeezed by higher energy and gasoline costs. A third said they had raised prices, up from 26 percent who had reported raising prices last fall.

The National Federation of Independent Business Research Foundation, which surveys more than 3,500 owners via mail every four years about problems of greatest concern, reported in June that energy costs, excluding electricity, were the second most pressing concern after the cost of health insurance. Energy jumped two spots from the earlier survey.

The primary energy expenditure for 38 percent of the companies responding to the survey was to operate vehicles. Most small businesses cannot afford to switch to more energy-efficient vehicles, the authors said.

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