Three weeks into the Iran war, small businesses are starting to feel the pressure of the conflict, and experts say the worst may still be yet to come.
Unlike larger corporations who, at least in the short term, can absorb higher costs and shipping upheaval caused by the Iran war, smaller businesses are especially at risk, said Brett Massimino, an associate professor at Virginia Commonwealth University’s business school and chair of the department of supply chain management and analytics.
“Small businesses, they don’t have the margins or the reserves to really absorb those kinds of cost increases,” he told Fortune. “They’re faced with a dilemma of, do they try to expedite some of the shipments that might be delayed right now, or do they deal with the shortages.”
Yet, while these events may feel half a world away for Americans, they have already translated into real price increases at home for many homegrown small businesses.
The result? Maderia has needed to shell out more per pound of lobster to the fishermen than he would during the same season any other year—$17 per pound, compared to $13 or $14 per pound normally—which raises his operating costs.
For Lobster Boys, these increases have meant higher prices for shipping their products to the continental U.S.—increases that Maderia said the company has had to pass on to the restaurants and grocery stores they sell to. And yet, when these restaurants pass the higher prices onto their own customers, they also see a slump in demand, which means fewer orders for Maderia’s company.
“Everything has gone up, unfortunately, and customers are not liking it,” he said.
