In March 2020, Covid-19 all but annihilated Orion Brown’s business Black Travel Box, a Denver-based accessories company for travelers of color.
Though the company recovered as people began to travel and commute again, Brown noticed that shipments were arriving later and later. Even worse, the cost of goods from her suppliers skyrocketed by up to 40 percent.
“Demand has definitely gone up. If nothing else, people have lost their minds and are packing the airports,” Brown told Know Your Value. “But a few months out of the pandemic I started to see shipping delays going from five days to a month. I could pay to expedite, but the suppliers kept raising the prices, which then got passed on to us, the business owners.”
Brown’s journey is one felt by business owners across the country. According to the Bureau of Labor Statistics, the U.S. inflation rate hit 8.5 percent annually in March – a new 40-year high. Record shipping demands during Covid-19 shutdowns, coupled with rising gasoline prices due to the Russian invasion of Ukraine have driven the spike. Recent strict COVID-19 lockdowns in China will also likely add even more stress to the supply chain, according to Wendy Edelberg, director of the Hamilton Project.
“A lot of the challenge right now is managing inventory and managing your staffing needs,” Edelberg told Know Your Value. “It's very hard for anyone selling goods, for any firm to predict what demand is going to look like over the next year.”
While many businesses will be stung by the inflation, women and minority women-owned businesses often have less access to capital than their male counterparts. Despite the fact that their numbers have been increasing across the country over the years, women founders only received 2.2 percent of venture capital funding in 2020. Additionally, loan sizes were 41 percent lower than those given to male-owned businesses in 2021.
Inflation has forced business owners to be crafty and pivot on a dime. Orion Brown, for example, expanded her contracts, applied for corporate gifts and raised $70,000 in a crowdfunding campaign. She increased her workspace and decided to focus on infrastructure to store more inventory.
Other founders have been forced to make difficult decisions. Lisa Sun, owner of luxury inclusive clothing brand Gravitas, said that her fabric supplies went up as much as 6 percent due to an increase in petroleum costs. To cope, she’s had to pass those costs onto her customer base by raising prices incrementally. She told Know Your Value she’s had to keep her employees’ wages relatively stagnant for the time being.
“I feel bad for my workers because everything is costing them more. Basic supplies and groceries, things that they need to live on,” Sun said. “It creates a vicious cycle because my customers are also increasing.”
Rising food costs have impacted business owners like Kaylenne Brown, owner of Virginia-based vegan meal and baked goods company Plant-Based Eatz (no relation to Orion Brown). Flour has risen by 14.2 percent, milk by 13.3 percent and fresh vegetables by 5.9 percent year-over-year in April.
“I noticed in the span of a few weeks that kale went up $2.00 at my grocery store. I knew food would be affected. Whenever gas goes up, it affects food costs,” said Brown. To adapt, she has scaled down her business to in-person deliveries and has started working locally with Virginia farmers to source food for the community. “A lot of my contacts have had to shut down. I try to see it as, ‘if one door closes, another door opens.’”
Supply costs will probably remain high, but it’s unknown whether demand for goods will continue to soar in the coming months, according to Edelberg. A binge-like interest in goods may have been the norm during lockdowns in the U.S., but it is starting to wane in favor of service industries, such as airline travel, which went up more than 82 percent year-over-year in January. Yet, gas prices and supply issues will continue to cause a strain on goods shipments, she said.
“Try to be ruthless about what your inventory and staffing needs are over the next six months, and give some thought to whether demand will continue, or if people have been gorging,” Edelberg added.
To stay positive in these challenging times, owners have to remember their ‘why,’ according to Black Travel Box founder Orion Brown. Her company, which provides self-care and beauty travel accessories for women of color, will soon be available on Macys.com.
“It’s like pulling teeth, working through technical challenges,” she said. “Everyone is dazed by Covid-19, but I just think back to my ‘why.’ I am not saving the world with body butter, but I am standing in a gap of a consumer that really needs to be seen. I really think this should be out there and I don't think anyone else can advocate for it in the way I can.”