Inflation can be a double whammy for small business owners. At the same time businesses are dealing with the rising costs of materials, labor and energy, consumers may be cutting spending due to their own struggles to make ends meet. According to NPR, 60% of the world’s advanced economies are dealing with inflation. Finding ways to cope may be the difference between staying in business and closing the doors for many business owners.
Read on for some pointers from Business & Financial Solutions.
A lack of cash is the cause of failure for many businesses. This is particularly true when prices are on the rise. Building an emergency fund of cash can help keep you afloat when you have unexpected expenses or an important client is late with a big payment. Work on improving your cash flow by finding ways to incentivize customers to pay earlier, such as offering discounts or requiring deposits on large orders.
When prices go up, one of the most effective ways to deal with it is to eliminate unnecessary expenses. Review your monthly service contracts to identify any services that you can go without. See if you can renegotiate your contracts for necessary services or shop around for a vendor that is offering a better price.
MachineMetrics suggests looking for ways to reduce your production costs. Shop around for more cost-effective insurance coverage and eliminate any policies that duplicate coverage. Examine your marketing budget and eliminate spending that isn’t creating enough of a return. Make the most of your space and stop leasing extra space you don’t need.
As the cost of things goes up, your employees may need to earn more income to stay afloat. Avoid losing your best employees by ensuring you are paying them competitive wages and offering them enough work. If you can’t afford to offer higher salaries, consider ways you can help your employees save money, such as allowing them to work remotely instead of driving to work or offering stipends for expenses such as child care.
When you check into options for CDP – customer data platform, you’ll find that a robust and versatile CDP gives you a unified view of customers to gain deeper insights into who they are, what they’re looking for, and how best to target them with personalized marketing campaigns. Look for a CDP that utilizes customer profiles so you can deliver relevant, real-time experiences.
Payroll errors can cost your company money and cost you employees. You can avoid many errors by investing in accounting software. Accounting software can also do a lot of the work of managing your company’s financials for you. Save money by using free software that comes with basic features, such as invoicing and tax deduction tracking instead of paying a monthly fee.
It is important not to overextend your business by taking on too much debt. However, taking out a business loan or opening a line of credit can help you preserve your cash flow so that you can cover expenses and take advantage of opportunities.
You can use borrowed money to increase your employee’s pay, upgrade outdated equipment to lower production costs and introduce new products and services that can increase your profits. When deciding whether to take on debt, compare the financing costs to the opportunity and other costs associated with not taking on the debt.
Managing a successful business during times of inflation is not an easy task. These strategies – including cutting expenses, being creative to retain employees, and using a customer data platform – can help you deal with the challenges of rising prices while also growing your business.
Business & Financial Solutions offer specialized services that are available for both small, mid-sized and large businesses including new business start-ups. Contact us today for more information! (855) 557-2222