As a consumer, we’re sure you’ve heard about inflation nonstop. Everything from eggs to Pringles is skyrocketing in price, and your checkbook is likely feeling the pain.
But inflation won’t just impact you as a consumer; chances are your small business is feeling it too. Read on to learn why inflation may impact your small business and how to combat it.
How Inflation is Impacting Your Small Business
As a small business owner, inflation is probably impacting your business in two ways:
- Higher cost of goods. If you’re selling goods, you’ve probably noticed the price rise, even on the wholesale level. From ingredients to greeting cards, nothing is safe from inflation.
- Rising wages. It’s somewhat cyclical, but wages also must rise as the cost of goods rise. If everything is more expensive, employees need to make more money to afford everyday goods.
You may be feeling the crunch from one or both of the above. Overall, paying employees more and paying more for goods could impact your bottom line.
7 Tips to Help Your Small Business Tackle Inflation
As the cost of doing business rises, you might feel there’s nothing you can do to protect your business from the impacts of inflation. However, if you pause, you’ll notice a few practices that can help protect your business moving forward.
Keep an eye on your cash
You probably look at your books every day, but pay close attention to line items like cash flow. If your business involves invoicing for payment, make it a point to:
- Send invoices quickly
- Ask for immediate payment, or shorten your payment window (net-30 instead of net-60)
- Check on new clients before signing a contract with them to ensure timely and dependable payment
Reduce costs (where you can)
When you’re taking a look at your books, try to find ways to reduce expenses. It may be small, but every reduced cost helps.
- Asking providers (like internet & phone) for a reduced rate
- Re-negotiating rent
- Cutting out subscription services you never or rarely use
- Cover the cost of accepting credit cards with a cash discounting or credit card surcharging program
Raise prices (and communicate why)
Sometimes, raising your prices will be unavoidable. Although you might worry that raising prices will alienate customers, consider that your business might suffer in the long run if you don’t. And remember, loyal customers want to support your business too.
Instead of shocking customers with an increase, consider rolling the messages into your marketing or in-store experience. Give visitors a peek behind the curtain of how your business operates and why increasing prices is necessary to survive. Who knows? That kind of honesty might even win you new fans.
Keep your team happy
Inflation can create economic stress for all of us. While you may be anxious about bookkeeping or raising employee wages, try to listen to your employees and create a good experience for them.
Retaining employees helps keep operational costs low. If employees stick with you, you don’t need to take time to hire new employees, or train them, which can be a drain on your time and money.
Take time to check in on your team. Are there ways you can improve their workplace experience? Happy employees are more likely to stay with you in the long run.
Cut offerings or items
While you’re taking a look at your finances, consider your recent sales. What items are selling well? What aren’t you selling much of (or at all)?
If you notice certain offerings or SKUs haven’t been selling lately, consider cutting them entirely, at least for now. If you’re not profiting off something, cut it. Put the remaining items on sale, then focus on profitable and popular items.
Are you spending lots of time on tasks that could be automated?
For example, do you answer every email inquiry on your own? Consider automating the process with a series of email flows that could help answer frequently asked questions without a back-and-forth exchange that would take time out of your day.
It may sound minor, but this kind of streamlining saves you tons of time in the long run, as it pulls you away from simple, repeatable tasks that tend to waste your time. By automating some tasks, like payroll or invoicing, you can focus on doing what you do best.
Stock up wisely
Many of us learned this during the supply chain struggles of the pandemic, but stock up wisely when you can. With prices fluctuating wildly, if you see a good deal for an item, it’s worth stocking up on it. You never know when prices might jump again.
That being said, be careful not to overbuy. As cash flow is king, you’ll want to have some padding on hand.
Inflation is impacting all of us, but you don’t have to do it alone. Get Beyond can help you through the ins, outs, and finances of your small business. Looking for more small business insights? Subscribe to the Get Beyond blog to keep your business operations in top shape.
This article is provided for informational purposes only. Your business’s circumstances, goals, and objectives are unique to your business, so any information or opinions in this blog should not be construed as legal, tax, investment, financial, or other advice. We urge you to always consult with a professional advisor before making important business decisions.