Small businesses hurting in down economy 'They feel the pain first and have to respond the quickest' | Maryland Gazette (HometownGlenBurnie.com)

"Everything is going through the roof," he said.

Not only have food suppliers added fuel surcharges, but prices of food are drastically increasing. Add that to other miscellaneous fees, some of which are increasing, and one can understand why Vandy's Place is losing money.

"Even the Dumpster bill has a gas surcharge," Mr. Vandegrift said.

His financial woes are just one example of the current small business climate. According to the National Federation of Independent Business, the top concern of small business owners is inflation. It's occurring for the first time since January 1981, considered the worst in recent history.

"It's a little more difficult for them to pass on these costs," said Stephanie Cathcart, a spokesman for NFIB. "They have to compete with people twice their size."

The NFIB reported energy costs as the second biggest problem facing small businesses, with over 37 percent of businesses having energy costs primarily connected to operating vehicles.

Mr. Vandegrift said his biggest expense, after payroll, is electricity.

Two years ago, Mr. Vandegrift was paying 5 cents per kilowatt hour and his bill was about $1,100 a month. Now, with a rate of 14 cents per kilowatt hour, he pays about $2,500 a month.

But the costs go across the board. A 50-pound bag of flour, $10 in February, is now $30. Tomatoes went from $22 to $32 for a 20-pound case. A 12-pound case of crabs was $100 a year ago. Now it's $225. Chicken went up in price by 22 percent one week in February.

"You just gotta eat the difference," Mr. Vandegrift said.

Terri McAllister, vice president of McAllister Plumbing in Glen Burnie, said his company's fuel costs has increased significantly over the last six months. The company, which runs two trucks, pays about $1,300 a month for gas, up from around $1,000 a month.

The costs of parts has also increased, which they have somewhat passed on to consumers without raising hourly rates. Customers are only getting necessary repairs done, without additional work that was often requested in different economic climates.

"People are shopping a lot harder than they have before," said Ms. McAllister. "As a consumer, I totally understand."

Fuel costs have also affected the Maryland Yacht Club, where General Manager Mike Stokes said people are boating less and eating less often in the restaurant.

"Everything we do has got to do with fuel," he said.

With the increased prices in food and liquor, Mr. Stokes raised restaurant and bar prices 10 percent across the board.

Members are only coming about once a month, he said, rather than the usual to or three times, to spend their monthly requirement. The club, which is only open to members, requires members to spend a certain amount at the club each month.

Mr. Stokes has also cut back on employees. This time last summer, he had about 15 employees. He has 10 for this summer, five of whom are part-time employees whose hours he's had to cut by eight to 12 hours a week down to about 20 hours.

"A lot of them are working two or three jobs because I don't have the hours for them," he said.

The NFIB reported that the number of people employed by small businesses declined in June by an average of half a worker per firm, with 18 percent reducing employment by 4.6 workers.

Anne Matson, owner of All Things Country in Pasadena, had to lay off three of her 10 employees. Two of them were full-time.

"Our business has suffered greatly in the last several months from the consumer cutback in spending," she said. "You need the traffic flow or you're in big trouble."

Some businesses, rather than cutting employees to meet increased costs, have cut back on benefits, such as Nor-Lin Auto Parts in Linthicum.

"(Insurance) is a necessary thing, but the cost is always a problem," said President David Schmidt, whose wife, Fran, is the executive director of the Northern Anne Arundel County Chamber of Commerce.

This year has been a tough one for Nor-Lin Auto Parts. The prices of parts have increased, especially oil-related products, and repair shops have been buying fewer parts. People are only fixing what's necessary and holding off on other repairs, Mr. Schmidt said.

"I've adjusted my pricing to covered increased costs," he said. His prices across the board have been raised.

Ms. Cathcart, the spokesman for the National Federation of Independent Business, said small businesses have to make decisions like this because of tight budgets, which limit the ability to adjust to the market.

"It's tough because small businesses are the first ones that feel it," she said. "They feel the pain first and have to respond the quickest."