By Andrew Miller
After months of stabilizing revenue, small business profitability growth finally turned positive in June.
It’s the first time since the start of the year, according to Bank of America’s Small Business Checkpoint.
However, stronger inflows haven’t translated into meaningfully better margins. Ongoing costs have kept pace or exceeded revenue. That’s the case for a lot of small business owners right now. Business isn’t declining, but it’s not truly growing either.
The first instinct in that position is to raise prices. What’s unusual is how long that instinct has outlasted the conditions that normally justify it.
The amount of small business owners planning to raise prices has climbed for nearly six years, even as fewer of them expect stronger future real sales. That’s not an aggressive bet on demand. It’s more like defending a margin that’s not expected to grow any other way.
But some relief could happen soon.
Gas prices fell from their recent peak, though spending was still up double digits year-over-year in June. In addition, tariff refunds have started moving faster. An estimated 23.4% of tariff payments made directly to Customs and Border Protection have now been returned, up from 6.7% in May.
The payments aren’t likely to change much. Bank of America’s research points out that refunds like this are often used to pay down debt or pad cash reserves, not to fund hiring or new investment.
Ultimately, these factors still amount to many small businesses running in place. Revenue is a step ahead of where it was, but not by much.
P.S. That kind of progress doesn’t leave much of a foundation to build on. Signet can help you find financing that fits your business. Contact us now to explore your options.