The Effects of Gas Prices on Small Businesses and The Economy

Chris Beck

Not very many people get excited about going to the gas station. It is one of those routine tasks that most of us push off for as long as possible. Between the inconvenient time or the money that could be better spent in one hundred different ways, it isn’t something most people look forward do. However just before the 2014 Holiday season, gas prices throughout the entire country dropped to decade lows. While gas has bounced back up in some areas, others have been able to retain their gas prices.

For consumers, this is simply a budgeting game. Monthly budgets for the cost-savvy consumer change slightly to accommodate the gas prices. For small businesses, this is actually an entirely different story.

Against common conception and logic, small businesses don’t necessarily gain from lower gas prices. Ultimately, large businesses are more elastic and able to quickly adapt to price fluctuations throughout their entire supply chain.   Small businesses don’t have the resources for such adaptability.

Whether the gas prices are high or low, small businesses can for the most part manage; the real struggle comes with instability. When gas prices are fluctuating, small businesses have a hard time predicting their NOI which ultimately affects every business decision the business owner needs to make. From staffing to inventory, these crucial aspects of a business’ operations are a shot in the dark when the prices fluctuate. Steady prices however enable the business owner to accurately forecast, staff, and hold inventory accordingly- all of the components for a successful business.

National Funding created this infographic to show the effect of gas prices on small businesses and the great effect small businesses have on the economy. In addition to the benefit small businesses provide to consumers, their impact on the workforce is substantial.

So if you are planning on owning a small business, kudos to your great contribution to society- but keep in mind that fluctuating gas prices, whether low or high, come at a high cost.

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