These Small Businesses Found Ways to Thrive Amid Inflation

These Small Businesses Found Ways to Thrive Amid Inflation
Illustration by The Epoch Times, Shutterstock
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Americans have worked harder and spent more money in recent years to maintain their standard of living.

According to the Congressional Joint Economic Committee, the average household is spending nearly $11,500 more annually to maintain the same living standards as in January 2021, before inflation increased to a record 40-year high.

Government data show that since January 2021, average hourly pay for workers has increased by 13.6 percent. However, that’s lagged behind the 17 percent increase in inflation during the same period. Inflation numbers released on July 11 show that the annual inflation rate has now eased to 3 percent.

The primary areas that demand increased spending for consumers to stay afloat are food, transportation, housing, and energy. These categories collectively account for nearly 80 cents of every $1 in additional spending.

Some small businesses are finding ways to thrive amid the challenges posed by inflation through strategic adjustments, resilience, and leveraging opportunities that arise in a volatile economic environment.

Growing Despite Inflation

Tina Castaneda had a mission to simplify making authentic birria Mexican tacos for the average home cook.

In November 2023, she created EZ Bombs spice from her home in Victorville, California.

The product revolutionized the preparation of birria tacos, and the business found rapid success by using social media marketing on sites such as TikTok and Instagram. Molded into the size of a baseball, the ingredients combine traditional herbs and spices to capture the rich flavors of birria, without requiring extensive preparation or numerous individual ingredients.

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EZ Bombs founder Tina Castaneda shows her homemade birria tacos kit. Courtesy of Tina Castaneda

“I was just praying how I could stay home with my dog and spend more time with my family,” Ms. Castaneda told The Epoch Times. “I hoped we would have enough orders to make some extra money.”

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Ms. Castaneda’s son, Brandon, and daughter, Nicole Munoz, also work in the business. In its early days, 4,000 packages were sold in one week out of the family home. In June, EZBombs received 90,000 orders.

“The biggest surprise is that I didn’t expect this to grow so big so fast,” Ms. Castaneda said. “My family liked my food, but sharing it with many others has been a blessing. It’s become a weekly staple in many people’s homes.”

Ms. Castaneda said the company has experienced organic growth using social media videos to instruct “people on how to use the product.”

“One TikTok video went viral, receiving over a million views,” Ms. Castaneda said. “We found that user feedback sells our product itself.”

Flag Company Relocates

James Staake is the founder and president of Your American Flag Store, a family-owned business that specializes in handmade wooden U.S. flags. He started the company in 2018, focusing on creating handcrafted wooden flags for customers across the United States.

Mr. Staake said the cost of doing business has doubled and, in some cases, nearly tripled because of inflation since he started the business seven years ago.

“Our wood and other materials were 60 percent lower when we first went into business,” Mr. Staake told The Epoch Times.

“We have not been able to raise the cost of the flags because we would price ourselves out of the market, so we just absorb the loss.”

Mr. Staake and his family used to live in a rural area of San Diego, but to offset the extra inflation costs, they relocated to Harriman, Tennessee, about 30 minutes west of Knoxville.

“Labor costs stayed stable only because we relocated,” Mr. Staake said. “If we had stayed in California, high costs for goods and services would have forced us to go out of business.”

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Your American Flag Store founder James Staake makes a U.S. flag. Courtesy of James Staake

The family-owned business owners said that because Tennessee doesn’t have an income tax, and family members chip in with some of the labor, costs can be kept down.

Mr. Staake’s wife, Ginger, has single-handedly painted more than 650,000 stars on their handcrafted flag products.

When the business started, each flag cost about $35 to produce and ship—now, it’s about $73 per flag.

“Every single manufacturing process has doubled to get the flag to the consumer,” Mr. Staake said. “Moving to Tennessee has helped tremendously. I’m not sure why we waited so long.”

Mr. Staake maintains that his flag products garner a lot of appeal to patriotic customers, especially what he calls “protest purchases.”

“When the Biden administration does something that irritates conservatives, our sales increase,“ Mr. Staake said. “We had a rush on Trump flags immediately following the recent presidential debate.”

In addition to the frustrations that come with inflation, as a small business owner, Mr. Staake has faced several challenges, particularly from big tech companies.

In early 2021, his business experienced a significant decline in website traffic and sales, which he later discovered was caused by restrictions imposed by platforms such as Facebook, Shopify, and PayPal. These companies suspended his advertising privileges and froze his PayPal account, citing violations of “community standards,” without providing specific explanations.

“Cancel culture doesn’t help fight inflation when tech companies shadow-ban our product,” Mr. Staake said. “Our ad spend doesn’t produce like it used to because we’re being targeted for the nature of our product. The tech companies heavily censor our Second Amendment, Christian, and First Responder flags.”

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The Federal Reserve in Washington on May 2, 2023. The Fed's annual inflation target of 2 percent has been exceeded since the beginning of 2021. Win McNamee/Getty Images

Despite these setbacks, Mr. Staake has remained resilient, relying on his faith and the support of his customers. He recommends that small business owners get to know the vendors and suppliers and work together on pricing.

“I get nervous and anxious when I purchase materials because I can’t predict the prices,” Mr. Staake said. “I have a good relationship with our suppliers, who help me know what’s coming. We’re all working together, trying to help one another out.”

Mr. Staake has been vocal about the challenges that small businesses face and has called on others to advocate for those whose livelihoods have been affected.

Inflation and the Fed

The federal government’s approach to managing inflation has significant implications for small business owners such as EZ Bombs and Your American Flag Store.

When inflation gets too high, banks frequently raise interest rates to curb unnecessary spending and bring economic equilibrium. This can result in higher overhead costs for business owners, in the form of rising rent and higher interest rates on personal and business loans.

At their June meeting, Federal Reserve officials stated that although inflation is headed in the right direction, they still need more time to cut interest rates.

Voters on the Federal Open Market Committee ended the meeting with rates remaining unchanged, even though the minutes showed disagreement among the 19 central bankers who took part in the discussion—some even suggesting a preference for raising rates if necessary.

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A customer shops at a grocery store in Mill Valley, Calif., on June 11, 2024. Government data show that the primary areas that demand increased spending for consumers to stay afloat are food, transportation, housing, and energy. Justin Sullivan/Getty Images

“Participants affirmed that additional favorable data were required to give them greater confidence that inflation was moving sustainably toward 2 percent,” the meeting summary said.

The Fed sets an annual inflation target of 2 percent, which it has exceeded since the beginning of 2021. The meeting’s officials stated that although the data have improved recently, they still need proof that the trend will continue.

Bryan Cutsinger, an assistant professor of economics in the College of Business at Florida Atlantic University, told The Epoch Times that by failing to adjust the target rate, the Federal Reserve has manipulated the market, destabilized the economy, and monetized a portion of the recently issued debt.

“The federal government competes for scarce credit, and the challenge for the Fed is that if they don’t raise their interest rate, they are, in essence, paying for the debt by printing money, making it harder to control inflation,” he said.

Mr. Cutsinger maintains that the Fed’s performance is far from ideal. The Fed cannot linger in indecision in a fiat system, as even inaction can be manipulated.

According to Mr. Cutsinger, the problem inflation poses for individuals and businesses is how to think about the future—whether it be retirement or relocating. People try to execute a plan that they believe is viable, but it turns out not to be so feasible.

The government’s vacillation on how to curb inflation will continue to cause small business owners to work harder while making less, he said.

That’s certainly true for the Castaneda family. Ms. Castaneda said that keeping costs low for EZBomb customers is challenging because of the significant rise in labor costs and the high tax rates in California.

“We’re looking at relocating to Texas or Florida as one way to fight inflation and the high cost of doing business in California.”

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