Small businesses are living on edge with rising oil price. It seems tougher to grow their business as prices have risen with escalating oil and gasoline prices. Places that are hard hit by the price hike are Tunisia, Egypt and Libya. This increase in price has drastically affected business flights, shipping charges and everyday travel expenses. The new cost structure makes it very difficult for small companies to thrive that normally function with small margin.
Things become grimmer for startups. They need to concentrate on securing funding and for that, the start-ups need to show a path to profitability. Gasoline’s rising cost has ripple effect on small business as it leaves a major impact on costs, sales and profits. These three things are especially important as normally financial institutions examine these criteria before lending money to entrepreneurs. People involved in trucking business or transportation industry are going to find it harder to secure capital now than it used to be previously.
The recovery in economic momentum is set off with developments in the Arab world. Rising fuel prices do not just account for increase in shipping charges but it also cripples consumers’ spending capacity. The interests of retail businesses thus get hurt. Cash losses grow and challenges of reviving customers back to the spending mindset become daunting. One good reason for the 2008 recession is the oil prices rising to $150. A repeat in the oil price rise may cause damages to the fragile economic recovery.
A greater threat to small companies is a paradigm shift in customer trend as they may start shopping at large discount stores charging lower prices. Thus it is a growing concern for all small businesses to see decline in consumer confidence and the reluctance to spend when gas prices keep soaring. High fuel cost may also be deteriorating in terms of job generation as small businesses themselves account for 70 percent of new jobs in the economy.
To curb the menaces of rising fuel price, what small businesses can do is they can make use of technology in its best possible way. The ways are as under:
- Opt for VoIP based networking such as ‘Skype’ if the business deals with international clients and vendors.
- Make use of Biz2credit to secure funding .
- Avoid flying, instead schedule conference calls or video conferences.
- Reduce printing and mailing charges by opting for electronic invoicing and payment methods.
- Make it possible for employees to work from home.
This article was submitted by Rohit Arora, co-founder of Biz2Credit. Biz2Credit is a small business marketplace that connects entrepreneurs with financing options and advice to grow their business. Send all questions to