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High gas prices are hurting small businesses that need big vehicles

AILSA CHANG, HOST:

As President Biden makes plans for a gasoline tax holiday, small business owners and the self-employed are hurting. Many drive gas-guzzling trucks or vans and have little choice but to pay up. From Chicago, NPR's David Schaper reports.

DAVID SCHAPER, BYLINE: It's one of the surest sounds of summer...

(SOUNDBITE OF LAWNMOWER)

SCHAPER: ...A landscaper firing up his lawn mower to cut the grass in yards on Chicago's northwest side. Antonio Urrianna leads this three-person crew for Arturo Landscaping, and I ask him how much he spends on gas.

ANTONIO URRIANNA: A hundred.

SCHAPER: A hundred dollars a day?

URRIANNA: Yeah.

SCHAPER: For what? What are you filling, the truck?

URRIANNA: For truck and machines.

SCHAPER: The truck and the...

URRIANNA: Machine.

SCHAPER: The machines are three large mowers, an edger and a leaf blower. Oriana shows me the gas station receipts he has on the seat of his truck, which runs on diesel.

URRIANNA: Diesel - six.

SCHAPER: Over $6?

URRIANNA: Yeah.

SCHAPER: Landscapers often set their prices in the winter before the mowing season here begins or even in the fall for returning customers long before gas prices skyrocketed this high. And raising prices now is tricky, as they could lose customers. And they're not the only ones struggling to make ends meet.

KALEENA MARK: Did you have a question, ma'am? What can I get for you?

SCHAPER: At this farmers market, downtown Chicago, Kaleena Mark of Mark Family Farm Market is helping the last couple of customers while her husband Jon packs up the tents, tables, and produce they didn't sell, to take back to the family farm in La Porte, Ind., about 65 miles away.

MARK: And you can't bring a little bitty car, so you have to bring a truck. You have to pull a trailer. On average, when we pull the trailer, which is what we brought today, to bring our product to the market, the pickup truck gets about 10 miles to the gallon.

SCHAPER: At about 5.25 a gallon, Mark says making twice weekly 130-mile round trips to farmers markets in Chicago, in addition to all the other fuel costs on the farm, really adds up.

MARK: I would say easily between fuel for the tractors, fuel for the work truck, and then just regular fuel that we spend on a normal basis to get from here and there, we're probably easily $500 a week in fuel.

SCHAPER: So the Marks say they've got to sell just about all of their flowers, tomatoes, asparagus and strawberries just to cover those costs - and on this day, they didn't.

MARK: It makes it very hard if you come out and you come all this way and you bring a bunch of stuff and then you have to pack it all and take it back home. That's the hard part. Right now, we're more negative than positive on the books. Let's put it like that.

MICHAEL ALTER: They're getting squeezed on just about every aspect you can think of.

SCHAPER: Michael Alter is a professor of entrepreneurship at the University of Chicago's Booth School of Business. And he says small businesses that are route based or have to drive to their customers like contractors, plumbers, electricians, cleaning services, exterminators, they're all taking a hit.

ALTER: And what's happening is the cost to do the same service is going up materially because their fuel prices are so much higher. And that just hurts profits and it hurts cash flow at a time when they're likely struggling.

SCHAPER: And Alter says many of those who are self-employed or run small businesses don't have much of a cushion.

ALTER: So you've got folks that don't have as much reserve to manage through these higher prices and lower profits and the cash flow hit that's going to happen to a lot of them. And so I would expect that there will be some businesses that unfortunately don't make it through.

SCHAPER: Alter advises small businesses to not shy away from raising prices or adding surcharges because most customers now understand the need and expect it. But he adds that the economic uncertainty right now makes it very difficult for small businesses to plan ahead for next year, next month, and in some cases, just tomorrow. David Schaper, NPR News, Chicago. Transcript provided by NPR, Copyright NPR.