Small business owners on inflation, costs, hiring and retention

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  • Last year was a perfect storm for small businesses with labor shortages and inflation.
  • As things like butter and eggs become more expensive, the price of bakery butter and designer cakes has gone up.
  • The plant shop experienced a huge turnover during the Fernsedu outbreak.

The people of the Bay Area wanted their bread.

Cake shop Butter and the San Francisco Bay Area business landed on a valuable spot of quarantine cakes meant to serve just one to two people during the outbreak. At the outbreak, butter and some workers were furloughed in order to meet the demand in the restaurant industry.

But in 2021, hiring for Butter & – like many other businesses competing for workers – wasn’t easy.

“When we interview people, sometimes they don’t show up or they’re not as interested or excited as we want them to be,” Amanda Nguyen, Butter&’s founder and CEO, told Insider. “And because we compensate well and it takes a lot of time to train someone to be a cake maker, we’re very careful about bringing someone into our tight knit team who isn’t invested in the role we have. They.”

Fernseed, a flower and plant shop with two locations in Tacoma, Washington, has also experienced hiring problems. The business plans to hire eight people in 2021, but only two are on staff.

They are not alone. Hiring challenges and turnover continue to be a problem for many small businesses as they experience the ongoing effects of the Great Layoffs and higher inflation.

“Uncertainty in the small business sector is rising again as owners continue to manage historic inflation, labor shortages and supply chain disruptions,” said Bill Dunkelberg, chief economist at the National Federation of Free Trade Associations. “As we move into the second half of 2022, owners will continue to manage their businesses in a very uncertain future.”

Not all small businesses are getting the people they need to fill vacancies

Job vacancies in the US are still high compared to pre-pandemic levels, but According to a July 2022 job report from the National Federation of Independent Business, 49% of employers were “unable to fill job vacancies.”

Catherine Raz holds the flowers

Catherine Raz.

Courtesy of Catherine Raz


present time.”

Fernseed owner Kathryn Raz found it wasn’t easy finding workers—especially with such a narrow skill set in floral design. However, five of the seven people currently in the workforce will be employed by 2022, not including herself.

“We had a revolving door of hiring for about a year,” Raz said, noting that her job is always hiring now.

She said the business relies more on employee referrals and the two sites the business used to find workers, rather than actually finding applicants on the job vacancy form on its website and on Craigslist.

“I wouldn’t necessarily say we have a challenge to find the right people for the positions,” Raz said. “We didn’t get as many applicants as I would have expected with some background in floral design.”

Turnover was an issue for a plant and flower shop. The reasons people go vary; Some went elsewhere. Another reason, Raz said, is that they are “tired of the ambiguity of working during the pandemic.”

Nguyen said one reason it may be difficult to hire butter in 2021 is because “there were a lot of people who did more on unemployment than they did in the food industry.”

Butter& is not hiring any bakers for 2021. The business has already started three people in 2022 and is looking to hire an operations specialist and one or two production assistants.

When only one person recently gave notice, the cake business was in high demand. Nguyen said Butter& Compensation can always be one thing to help attract and retain talent. The business recently increased its payout by 33 percent.

“What I pay a lot of attention to is how much of your income you spend on your team, and it’s an area where I like to be as generous as possible because it’s hard to find people,” Nguyen said.

Inflation is at a four-decade high, and that means businesses need to think about rising costs and the impact on their employees.

Another issue for small businesses is high inflation. Raz is a business owner who has to make a choice about whether to raise prices.

“Obviously, as the cost of flowers increases per stem, we’re trying to take a proactive approach to make sure we’re increasing prices to deliver certain products on the site if we need to,” Raz said.

“From pottery and everything else, shipping costs have gone up, material costs have gone up. So as soon as we get a notification from one of our suppliers that prices are going up, we go into the system and update the prices,” Raz added.

Nguyen and her fiancé, Ted Moran, are not only the founders of Butter, but also co-founders of Pastel, which works with other businesses in the area. Some businesses that work with pastels have found that they have to raise prices. Butter and more recently, signature designer cakes have gone up in price as various ingredients have become more expensive.

Amanda Nguyen and Ted Moran

Amanda Nguyen and Ted Moran.

Submitted by Amanda Nguyen


A cost-analysis of some of the ingredients shared by Butter and Insider shows that butter prices in May 2022 are more than 100% higher than in February 2021. The price of eggs has also increased by more than 80%.

Businesses are wondering how they can help their teams with inflation so high. For Raz, she previously made a 5% cost-of-living allowance for all employees.

“I thought we would accept this somehow, but now I’m looking at payment as a retention tool,” Raz said.

Inflation may have slowed in July, but businesses are still considering raising prices to cope with rising costs. An NIB survey conducted from June 31 to July 7 found that 70% of small employers plan to increase their average selling price in the next three months.

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