For instance, the cost of a box of nitrile gloves had for many years been $6.32, but overnight it increased to $13 a box. We sell these boxes by the pallet load. Not many small businesses can absorb that cost increase. We also saw price escalations on products such as safety glasses, hard hats and vinyl gloves (all petroleum-based products) of anywhere from 6 percent to 15 percent.
Our sales force visits clients in a two-state area. The company’s bottom line has been further impacted by the rising amount we’re spending to reimburse employees’ work-related auto expenses, including gas fill ups and/ or mileage. There may be two and three fill ups a week at an average cost of $50 each. Do the math — that adds up with five sales people.
Last January, we presented this information to our largest client and told them our prices across the board have been increased by all our suppliers and we needed to increase their contract prices. We could no longer sustain the increased costs and drastically shrinking margins. At this point, the client turned a blind eye to our pleas and the data we presented. They chose to go out for bid and found another company eager to win their business with a low bid.
As a result of being unable to pass on costs to our clients, we had to make the hardest decision of our lives in opting to lay off several long- term, quality and loyal staff members. That was particularly tough because we pride ourselves on our employees. Our average employee retention has been 17 years.
Contributing to the unemployment rolls is painful to me personally and as a responsible business owner and citizen of this great country. But as an entrepreneur, you reach a point when very tough decisions must be made in order to save the company.
We are moving out of a 30,000-square-foot building we have owned since 1989 into two small offices of less than 2,000 square feet. An entrepreneur does what must be done when you are in dire straits.
On a personal note, my family began thinking about the rising costs of doing business several years ago as we purchased one of the first hybrid cars to enter the market. Our first was a small Honda Civic, which has given us seven years of very good gas mileage and is still considered one of the best cars on the road for that purpose.
That inspired us purchase two hybrid SUVs for the business. We feel we have made a very wise decision, which has saved us money.
Still, our small company has personally taken a large hit due to the ever rising costs of fuel. And unfortunately there is nothing more we can do about it.
Christine J. Bierman is the CEO and founder of Colt SAFETY, Inc., which distributes industrial safety and facilities maintenance products and services from its branches in St. Louis and Las Vegas.