Surviving the price squeeze means small and mid-size businesses must find ways to turn pressure into opportunity.

August 14, 2025

Maria Lopez opened her specialty coffee shop in North Carolina with one goal: to give her neighbors a place where good coffee and friendly conversation came together. For years, she weathered rising costs by tightening her budget, never passing the increases on to her customers. But when her latest supplier invoices landed on her desk, the math no longer worked. Coffee beans cost more, packaging prices had jumped, and delivery fees had nearly doubled. This time, there was no easy fix. Raise prices and risk losing loyal customers, or hold the line and watch her profits disappear.

Maria’s story is becoming the rule rather than the exception. Across the country, small and mid-size businesses are grappling with the sharpest spike in wholesale costs in years. The U.S. Producer Price Index jumped 0.9% in July, the biggest monthly leap since mid-2022. Goods rose by 0.7% and services by 1.1%, with food, metals, electronics, and wholesale distribution taking some of the steepest hits. New tariffs have only added fuel to the fire. Costs that were once quietly absorbed by importers are now moving down the supply chain, landing squarely on the shoulders of retailers and small business owners.

For business owners, understanding the forces behind these increases is the first step toward adapting. Monitoring industry reports like the Producer Price Index can help anticipate cost shifts before they hit the bottom line. Owners can use this information to adjust budgets, renegotiate contracts, or introduce gradual price changes that customers are more likely to accept. Proactive communication with suppliers and staying informed about market trends can turn economic data into a decision-making tool rather than a surprise.

For those running smaller operations, the squeeze is relentless. Without the buying power or negotiating clout of large corporations, they face a brutal equation: every cost increase chips away at already-thin margins. Even modest hikes force hard decisions about hiring, inventory, and investment. And while small business optimism ticked up slightly this summer, uncertainty still hangs in the air. Owners cite climbing expenses, wage pressures, and slowing sales as major threats.

Here, adaptability becomes a competitive advantage. Small business owners can explore cost-sharing opportunities, such as joint purchasing with other local businesses, to increase buying power. They can also review operations for inefficiencies, from renegotiating delivery schedules to streamlining product lines, to protect margins without sacrificing quality. Building flexibility into financial planning ensures that even when costs rise unexpectedly, the business can adjust rather than absorb the full blow.

The pressure is not confined to mom-and-pop shops. Big brands and retailers are locked in their own tug-of-war over prices. Retailers, wary of customer “sticker shock,” are pushing back against supplier hikes and ramping up private-label offerings. Brands counter that tariffs, commodity costs, and labor expenses leave them little choice but to charge more. In these battles, smaller businesses often find themselves caught in the crossfire without the leverage to negotiate or the flexibility to pivot quickly.

Small operators can learn from these larger negotiations by focusing on building value that goes beyond price. When customers see a clear difference in service, quality, or experience, they are more likely to choose a small business even if the price is slightly higher. This could mean offering personalized service, unique products, or community-centered events that create loyalty and make price less of the deciding factor.

Yet these businesses are far more than economic statistics. They are the heartbeat of local communities, adding character to neighborhoods, creating jobs, and offering the personal touches big-box stores cannot match. Their survival depends not only on their own resilience, but on whether suppliers, policymakers, and customers choose to stand with them. Because in the end, supporting a small business is not just about a purchase, it is about keeping the soul of a community alive.

The takeaway for both owners and customers is clear: resilience is built on preparation, creativity, and connection. By treating challenges as learning opportunities, whether that means improving cost tracking, expanding networks, or educating customers about the realities of running a business, small and mid-size enterprises can strengthen their ability to withstand economic pressures. In doing so, they ensure that businesses like Maria’s continue to thrive, keeping communities vibrant for years to come.