Inflation is hitting the economy hard, and if you’re a business owner you’re probably feeling it from all sides. Not only are you paying more for your personal expenses, but your business is dealing with the same supply-chain issues, short-tempered clients, staffing issues, and higher costs that are driving concerns among 3-out-of-four small business owners.
Inflationary pressures are disruptive and worrying, but they are not insurmountable. You just need a plan. Every business is different, and some solutions work better for some than others, but here are five tips that can help you get through the next few months as the economy gets back on its feet. At least one — and maybe more than one — is likely to provide a workable answer for your business.
You may be debt-averse, but if you’re struggling in the face of inflation then taking out a business loan may help you through the toughest days, especially if you use the money you borrow to help build your business. Rather than using cash as a cushion, invest in ways that will help you ride the storm, whether that means using economies of scale to order more at lower prices, hiring more staff, buying new equipment to make the business more efficient, or expanding your physical plant.
Nobody likes to raise their prices, especially when customers are already struggling, but if you do so, you won’t be alone. Most businesses are being forced to charge more. If you’re concerned that raising prices will anger your clients, try offsetting prices by offering discounts for larger quantity purchases, or by offering loyalty points or rewards. Make sure that you’re not making the shopping experience less enjoyable at the same time that you are charging more. That’s a sure way to lose customers.
No doubt that you’re taking a closer look at your personal expenses in the face of higher prices, but have you done the same thing with your business? Many business owners have been able to offset inflationary pressures by minimizing their overhead. There may be subscriptions or expenses that have crept into your budget over the last several years that are no longer necessary, or that can be easily cut until things improve. Just make sure that the cuts you make don’t have a negative impact on your customers’ experience, your business operations, or your employee morale. Those are areas where trying to save money can come back to bite you.
Employees represent a big expense, but they are also your most valuable asset. When you have workers who know your business and who are loyal to it, you are better able to make it through tough times. Businesses that lose employees end up offering a lower level of customer service, and training new employees costs far more than keeping current employees satisfied. If you’re not sure what your employees want or need, it’s always a good idea to ask them. You may not always be able to deliver, but sometimes things that seem insignificant to management - like greater flexibility, longer lunch breaks, service awards, or even free coffee — can make a big difference for worker happiness.
There’s an old adage that you have to spend money to make money, and that’s even true during inflationary times. One of the best things you can spend money on are the tools that help you increase your revenue and decrease your expenses, and that means efficiency-improving technology. From software that accelerates your employees’ ability to reach and service clients to management tools that help your staff manage the books and more efficiently generate (and collect on) invoices, innovations that can improve your bottom line are being introduced daily and may be well worth the investment.
Working with an expert advisor on your side can help you navigate the toughest economic climate.
About Bob Mason, CPA
Santa Cruz based Bob Mason, CPA (Coast Financial Services) has been providing the people of Santa Cruz with years of expertise in the tax and accounting industry. He provides a broad range of accounting, bookkeeping and small business services to help your business succeed. Using their expertise in technology they have built an intuitive website with useful tools and calculators and a monthly blog which they post to on a frequent basis. Check back weekly for their next tax or accounting topic.
