In March 2020, Covid-19 all but wiped out Orion Brown’s business, Black Travel Box, a Denver-based accessories company for travelers of color.
Although the business recovered as people began to travel and commute again, Brown noticed that shipments were arriving later and later. Worse still, its suppliers’ cost of goods skyrocketed by as much as 40%.
“The demand has certainly increased. At least people have lost their minds and are filling up airports,” Brown told Know Your Value. “But a few months into the pandemic, I started seeing shipping delays drop from five days to a month. I could pay to speed up, but the vendors kept raising prices, which was then passed on to us, the business owners.
Brown’s journey is felt by business owners across the country. According to the Bureau of Labor Statistics, the US inflation rate has reached 8.5% each year in March – a new record in 40 years. Record shipping demands during Covid-19 shutdowns, coupled with rising gasoline prices due to the Russian invasion of Ukraine drove the peak. Recent strict COVID-19 lockdowns in China will likely add even more stress to the supply chain, according to Wendy Edelman, director of the Hamilton project.
“A big part of today’s challenge is managing inventory and managing your staffing needs,” Edelman told Know Your Value. “It’s very difficult for anyone selling goods, for any business to predict what demand will look like over the next year.”
While many businesses will be hit by inflation, women and minority women-owned businesses often have less access to capital than their male counterparts. Although their numbers have increased across the country over the yearsfemale founders only received 2.2% of venture capital funding in 2020. Moreover, the size of the loans was 41% less than those granted to male-owned businesses in 2021.
Inflation has forced business owners to be crafty and pivot in no time. Orion Brown, for example, expanded his contracts, asked for corporate gifts and raised $70,000 through a crowdfunding campaign. She expanded her workspace and decided to focus on infrastructure to store more inventory.
Other founders were forced to make difficult decisions. Lisa Sun, owner of luxury clothing brand Gravitas, said its fabric supplies rose 6% due to higher oil costs. To cope, it had to pass these costs on to its customers by gradually increasing prices. She told Know Your Value that she needs to keep her employees’ salaries relatively stable for the time being.
“I feel bad for my workers because everything costs them more. Basic supplies and groceries, things they need to live,” Sun said. “It creates a vicious cycle because my customers also increase.”
Rising food prices have impacted business owners like Kaylenne Brown, owner of Virginia-based vegan meal and bakery company Plant-Based Eatz (no relation to Orion Brown). Flour increased by 14.2%, milk by 13.3% and fresh vegetables by 5.9% Year after year in April.
“I noticed within a few weeks that kale went up $2.00 in my grocery store. I knew food would be affected. Every time the gas goes up, it affects food costs,” Brown said. To adapt, she reduced her business to in-person deliveries and began working locally with farmers in Virginia to source food for the community. “A lot of my contacts had to close. I try to think of it as “if one door closes, another opens”.
Sourcing costs will likely remain high, but it’s unclear whether demand for goods will continue to soar in the coming months, according to Edelman. Excessive interest in goods may have been the norm during US shutdowns, but it’s starting to wane in favor of service industries, such as air travel, which have surged more than 82 percent year-over-year in January. Still, gas prices and supply issues will continue to weigh on cargo shipments, she said.
“Try to be ruthless about your inventory and staffing needs over the next six months, and consider whether demand will continue or people have binged,” Edelman added.
To stay positive in these trying times, owners need to remember their “why,” according to Black Travel Box founder Orion Brown. Her company, which provides personal care and beauty travel accessories to women of color, will soon be available on Macys.com.
“It’s like pulling teeth, taking on technical challenges,” she said. “Everyone is stunned by Covid-19, but I’m just thinking back to my ‘why’. I’m not saving the world with body butter, but standing in a gap of a consumer who really needs to be I really think it should be there and I don’t think anyone else can defend it like I can.