Impact of inflation on small businesses

Inflation makes it difficult for small businesses to survive. The cost of essentials such as raw materials and transportation continues to rise, putting pressure on business.

Unlike large corporations, small businesses lack the financial reserves to absorb these rising costs. One of the major challenges is the increasing cost of materials and goods. Business owners are often forced to raise prices, but consumers may resist these increases, leading to reduced sales and lower profits. Additionally, rising transportation and utility costs further squeeze both businesses and consumers.

Access to loans is another challenge. As inflation rises, banks increase interest rates, making it more difficult for small businesses to secure financing. Instead, the government and financial institutions should step in and offer low-interest loans to help businesses navigate these tough times.

Inflation also affects employees. Many small businesses cannot afford wage increases and, in some cases, are forced to cut jobs. This harms workers and negatively impacts the economy. To address this, the government could provide small businesses with tax incentives or financial assistance to help them retain employees.

To support small businesses, it is crucial to stabilise prices, improve supply chains, and ensure access to financial aid. When the government and other organisations work together, small businesses can survive, continue generating jobs, and contribute to overall economic stability.

Suaraiya Akter

Bachelor of Business Administration, North South University

asuraiya055@gmail.com