In recent months inflation has ballooned across the world, and it is no question that small businesses are feeling the pinch. Supplies cost more, Team Members are hard to find, and profits are shrinking.
It’s unquestionably challenging, but you can weather the storm with the following tips.
Study your data
Keeping track of your numbers is always great, but in times of rapid inflation, you’ll be grateful that you keep a nice, clean set of books. Analyse your data to learn what products and services generate the most profit, which ones cost the most to offer, and identify where you can save.
Cut expenses
Now that you’ve recognised where money can be saved go ahead and cut down where you can. It’s nice to be able to offer many products and services, but this is the time you need to tighten your belt.
Focus on the services and products that keep your business as healthy as possible, and forsake the rest, at least for the time being. It’s okay to streamline, especially when times are tough.
Adjust your prices
Nobody likes raising their prices; however, the reality is you likely have no choice. Keeping costs the same would indeed be excellent for your customers or clients. However, if you keep your products or services at the same prices as before inflation started to exceed rapidly, you’re absorbing the cost.
When you look into your reports, you may find that some things you offer actually cost you a fair bit of money. That’s not a sustainable business model; raise your prices to keep yourself afloat or find less expensive items to sell.
Simplify and automate
If certain aspects of your business take a long time to complete, see if there is a way you can reduce those hours. Switching to inventory management software or cloud accounting would be an excellent example, as doing so would save you time and allow you to focus your energy elsewhere.
Determine where you can simplify and automate and do it. Then, when inflation comes back under control, you will undoubtedly find that the saved time and efficiencies will continue to help.
Focus on your customer
Remember that customers and clients are keeping you in business and are also experiencing inflation in their lives, both at home and in their own businesses.
Ensure that lines of communication stay clear and open, especially if you’re going to raise your prices or alter your offerings. It’s easier to hold onto loyal customers and clients than it is to gain new ones, so make sure they know how much you appreciate them and communicate openly to maintain their trust.
Consider your employees
Good help is hard to find. Those who you employ are also feeling the sting. Automating what you can is essential; however, you must consider the effects it will have on your Team Members. See if their talents can be used elsewhere as parts of their jobs become automated.
Remember, this will pass
Inflation has happened before and will most definitely happen again after this. Historically, periods of inflation can last anywhere from a few months to a few years. One thing, however, must be remembered: all periods of inflation do eventually end.
Final thoughts
While inflation is problematic for small businesses, you can take steps to reduce its impact. Focus on what you can control and challenge what you can’t with confidence and creativity. With some planning, smart adjustments and clear communication, you will come out of this inflationary period intact.
If you have any questions, feel free to Join the conversation…