Price Inflation’s Effect on Small Business, Plus 8 Tips to Adapt
Informaton Courtesy of the Hartford – Read the Full Article Here
- What is Inflation?
- Inflation in 2022
- How is Inflation Measured?
- How Inflation Impacts Business
How Small Businesses Can Survive Inflation
These eight tips can help you adapt your business to survive inflation, protecting your current income and the future of your small business.
1. If you need help with cash flow as inflation continues, consider securing a business loan prior to planned interest rate hikes. If your business could benefit from refinancing its debt, you may consider joining the 16% of small business owners who plan to do so prior to rises in interest rates.
2. Analyze your profit margins. Consider the products you carry and services you offer — as well as how continued inflation affects their related expenses. Focus your efforts on the ones that currently perform best for your bottom line. For all others, consider which are most important to your future. If you find that one isn’t helpful to your business now, and you have low expectations for it in the future, consider whether it’s time to remove it from your offering.
3. Maintain an open dialogue and a flexible negotiator’s mindset when communicating with your suppliers. Doing so can help you build mutually beneficial, long-term relationships to support both companies during hard times.
4. If possible, buy items in bulk. Not only can you stock up prior to further price increases, but you may enjoy volume discounts that drive down the cost per item while also building in an inventory cushion that can insulate your business somewhat from supply chain disruptions.
5. Consider raising your prices, but do so strategically. Share news of impending price increases to customers ahead of time if possible. Most people understand and expect that prices will increase across the board, and they’re likely to appreciate the heads up.
6. Communicate openly with your customers and, as always, thank them for supporting your small business. You may even consider how to use creative pricing strategies paired with subscription-type orders to help them keep prices down during inflation while maintaining them as long-term customers.
- Have you considered a subscription-type model for your technology support and service?
7. Focus on improving productivity. Streamline your business processes, and use automation technology when possible. Doing so can help you save on current labor costs, stay resilient when hiring is difficult, and future-proof your business.
- How much time are you spending troubleshooting your technology? As a TSP Client, you save time by eliminating the need to troubleshoot, research or determine who to call when your technology acts up. All you need to do is contact our team. Learn how you will save time and money.
8. Inflation also affects the cost of replacing equipment and rebuilding should you suffer damage to your business property. Whether you’re running a well-established small business or a start-up, evaluate your current business technology to ensure you’re adequately covered.
- Start with a complimentary review of your current technology so you can be proactive. A reactive approach is expensive; it forces you to make a purchase when your equipment has failed, not when it is practical for your budget or when prices are lowest.
Use these challenging times as an opportunity to build more resilient business practices, and that includes your business technology.