Energy Costs Loom Large for Small Firms

Small firms are fretting about high energy costs as colder temperatures lurk just around the corner and gas prices go sky high.

The National Association for the Self-Employed recently released a survey in which 95 percent of respondents said increased energy costs are affecting their work.

One of the largest aspects of operations affected by rising energy prices is vehicle use, according to the poll. Three-quarters of business owners said they have had to reduce the amount of travel associated with their business.

At a July 29 press conference held by the Senate Republican Conference, a Virginia florist talked about how the high cost of gas is impacting his business. John Nicholson, the owner of Company Flowers & Gifts Too!, told lawmakers that his firm is struggling to keep its delivery charge at $9.50 even though gas charges account for more than $12 per delivery. The firm's wholesale flower costs also have risen dramatically, he said, because of the higher cost of jet fuel used to deliver certain flowers from places like California or Holland.

Eighty-two percent of survey respondents said they supported solutions such as allowing the nation's attorney general to bring an enforcement action against any country or company that is colluding in setting the price of oil, natural gas or any petroleum product. Seventy-two percent supported offering tax subsidies to energy companies to encourage expansion of alternative energy sources like clean coal, wind energy or natural gas, while 69 percent said tax credits should be provided to drivers who buy cars with fuel-efficient technology.

Meanwhile, the two top lawmakers on the Senate Small Business and Entrepreneurship Committee on July 31 sent a letter to the Small Business Administration urging it to implement a handful of energy initiatives designed to aid small firms.

The senators asked the agency to redouble its efforts to implement programs passed as part of a December 2007 law (pdf) known as the Energy Independence and Security Act. The programs are intended to help small businesses through a number of initiatives, including:

* Providing education on energy efficiency
* Creating a small business energy efficiency pilot grant program
* Offering grants to Small Businesses Development Centers to conduct energy audits of small businesses
* Allowing loans to be made through the SBA's Express Loan program for the purchase of a renewable energy system

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By Sharon McLoone |  August 6, 2008; 11:18 AM ET Data Points
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I agree with government stepping in and invetigating to determine if any collusion has been taking place in the oil industry. I ran a food delivery business for 7 years and the cost of gas went from $1.25/gallon to $4.50/gallon. This really impacted our bottom line profits as we could not increase the price of our products too much in fear we would lose customers whose cost of living was already skyrocketing. We were a premium service, and those are the first things consumers cancel when money gets tight.

I have to agree with you about the barrier to entry to start a business. It used to be a scary and possibly difficult endeavor to start a business. With the invention of the web, and more recently the advent of community created tools like Wordpress its never been easier. I still remember the day in the early 90's when I made my first instant message with someone in Japan (I'm in the US). It was in utter awe about talking with someone in Japan realtime. Anyways, going back to the original point. Starting a business on the web is so easy. Yes, you might not become a gazillionaire doing, but look at the bright side. You will connect with people, you will enjoy it, and you might even make some extra money to buy that 50 inch plasma you've been wanting. Best of luck!

Posted by: Ash | August 6, 2008 6:13 PM

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