It’s no secret that prices are on the rise with inflation reaching a 40 year high. If you are a small business owner, it has probably crossed your mind whether your business is going to survive in these tough times. So, what steps can you take to ensure you are protecting your company as much as possible? Firstly, let’s look at ways your business may be affected and then possible steps to tackle the effects these could have.
The cost of labour
With the cost-of-living crisis we are facing at this time, employees will be looking for pay rises to help with the cost of their own bills. Understandably this is not always manageable and can result in losing staff. One way you can help this situation is by offering employee incentives. For instance, rewards can be put in place for any employee that refers a customer to your company. Not only will this increase your exposure, customers and hopefully profits, but will also help give you more flexibility when needing to evaluate pay rises.
Purchasing power
Purchasing power is essentially the financial ability to buy products and services and how much your money can get you. What your money could afford a year ago compared to what it can get today could show a huge difference. With the costs of stock increasing to match the demands of inflation you may find stock is taking longer to arrive or that you cannot afford the same quantity as you did before. So, what can you do? Look at your investments, are they returning a real profit? Can you potentially invest in asset classes with a return expected to surpass inflation? You could also look at increasing your prices by a reasonable amount each year, roughly 1%. This could help with protecting you against future inflation. Finally, focus on building your brand. The more you create a healthy ecosystem for your company, the more you will be able to maintain your purchasing power during the harder times.
Save money where you can
Take the time to look at your overall expenses to find ways of cutting back. For instance, could you potentially offer remote work to your employees to prevent having to pay rental costs and additional energy costs? Are there more cost-effective ways of offering your service or product? If your company is product based, look at packaging, postage, suppliers etc. Maybe offer discounts for future purchases with time restrictions. If you are more service based then look at the ways you use travel, could you book work in a more organised fashion? Could you alter packages to gain a little extra for each sale?
I know all this may sound daunting, however, do not forget there are some real benefits to potentially be had during inflation as well. Although it seems like all the news surrounding inflation is negative for small businesses, don’t forget this is a chance to show why your company is able to survive and a chance to build a company that can survive any future changes too. Focus on spreading the word and the reach of your companies during these times. Consumers will be on the lookout for more cost-effective ways of spending their money. They will be actively looking for alternatives so do your best to make yourself seen and you could have a whole load of new customers coming your way!
Take care of these new customers and they will stay even after inflation levels out.
One last thing to leave you with, remember that this struggle is not a permanent state for small businesses. Keep pushing through and take care of yourselves. When you come out the other side of this, it will all be worth it!
If you would like more support and information than please download my free e book ‘7 key steps to fast track your growth’ 7 KEY STEPS to Fast track your growth Free eBook (woleososami.com)