As inflation rises, small businesses feel the financial crisis

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Some small businesses are feeling the financial crisis as inflation rates hit record highs. A North Carolina furniture maker says manufacturing materials are much more expensive today than they were a year ago.

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The owner of Carolina Custom Leather in Conover, North Carolina, says every material used in furniture construction has become significantly more expensive over the past year.

Customers browse while buying books at the Strand bookstore, Saturday, Nov. 28, 2020, in New York. The Strand is an independent family bookstore founded in 1927. (AP Photo/Mary Altaffer/AP Newsroom)

“Probably watching a cushion grow about 70%,” owner Todd Stroud said.

According to the company, supply chain issues, shipping delays and hiring shortages have made the pandemic feel like a roller coaster. And the ride is not over yet. Carolina Custom Leather says inflation is one of their biggest challenges right now.

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“Hypothetically, if I made $400 or $500 on a couch. Now if I make money on it, I could make $100 on it,” Stroud said.

The Consumer Price Index, which is the annual measure of change in prices paid by consumers, rose 7.5% over the past year according to the US Department of Labor. This is the fastest increase in four decades.

Small business owners stand apart from their local business. (iStock/iStock)

The National Association of Business Owners and Entrepreneurs (NABOE) says this likely makes the cost of doing business tricky for small businesses nationwide.

“That cost is rising, the buying public will only pay for their goods and services,” said NABOE founder Ron Wills.

“It’s crazy that this whole industry is booming right now,” said Davey Cartner, head trimmer at Carolina Custom Leather.

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Many furniture makers are still catching up after seeing a huge spike in business as more people stayed home during the pandemic. Previously, it took about six to eight weeks for a customer to receive an order.

Close-up sign of bankrupt business due to the effect of the COVID-19 pandemic. (iStock/iStock)

“Now we’re probably looking at an average of 30 weeks,” Stroud said.

This causes more problems because many sofas were bought some time ago at pre-inflation prices, but now have to be built at post-inflation costs. Carolina Custom Leather sticks to those old prices, but Stroud says you should expect to pay a little more the next time you shop for furniture.

“You’re probably going to end up spending about 15% more,” he said.

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While inflation is a priority at Carolina Custom Leather, so is hiring more workers. They say they would hire 15 people right now if they could.

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