With small business owners facing increasing costs and a labor crisis, it’s essential to consider a few important Business Steps to Beat Inflation. For starters, the Funding Circle recommends creating an employee retention strategy. Not only will this cost you money to hire and train new employees, but it will also mean less attention to customer service. And, who wants to be left behind? If you can’t find a replacement for a lost worker, that’s an issue, too.
Carefully Cutting Costs
The cost of a company’s products and services rises as the overall economy weakens. In an effort to beat inflation, companies often focus on price increases and finding new sources of growth. Carefully cutting costs, however, remains an important part of business management in today’s economy. This article discusses some of the most common ways to cut costs. Let’s examine each of these methods in detail.
While it’s difficult to predict the future of inflation, we can make a plan to deal with it. For instance, American Express recommends that small business owners reduce holding costs before prices increase. This is especially important now, when prices are high compared to last year. Today’s high prices will feel like low prices next year if inflation is half of the current rate. Many businesses take on debt to survive, but when the cost of debts rises quickly, the boundaries between bad and good debts become blurred.
Be Gentle with Customers
When businesses are faced with rising costs, one often recommended step is to raise rates. This advice has merit in several areas. Many businesses rely on low margins in a tight, competitive market. There’s not much room for savings unless you can re-negotiate with your vendors.
In some cases, our customers are also businesses. If they are also trying to beat inflation, they might look to you to negotiate pricing. This can cause a difficult situation because no revenue is much worse than low revenue.
Look to added value you can provide your clients that doesn’t incur as much cost. Look at your service delivery processes for opportunities to enhance services. You may find ways to add so much value that you can help your clients now with little to no price increase. When the economy recovers you will have a good basis to raise rates to catch back up.
Make Decisions Slowly
There is a great deal of advice out there right now on how to beat inflation in your business. Some of them will appear great on the surface and give you some hope if you act quickly. Without putting a new strategy through due consideration, you might make the situation worse.
Take time in considering your options. Refer to your business plan, values, and mission statement. These resources are excellent lighthouses to guide your way in troubled times. Of course, having a board, coach or consultant are also excellent resources.
I hope you enjoyed this article on Business Steps to Beat Inflation today. My goal is to provide some tips and information to help you in your business. This information is broadly written to apply to most businesses. However, each business needs a consultant or coach that understands your specific business, the niches it serves, and your unique goals. If you would like to book some time to chat, then click below!