Inflation can be a real problem for small businesses. Prices go up, but your revenue may not keep pace. Suddenly, it can be a struggle to make ends meet. But there are things you can do to inflation-proof your business.
Keep Cash Reserves on Hand
Keeping cash on hand helps you weather any short-term price increases. Some ways you can sock away money include automatically transferring a fixed percentage of your revenue into savings, keeping a line of credit open even if you don’t need to use it, investing in short-term bonds or other interest-bearing investments, and applying for a business loan to purchase products or pay down debt. Along these same lines, consider keeping a backlog of supplies you need for day-to-day operations as well as sellable products.
Offer Competitive Wages
Your employees are your most valuable asset. Inflation can eat into your profits, but it can also impact your labor costs. If you want to keep your best workers, you’ll need to offer competitive wages. You may also need to get creative with how you structure compensation. For example, you could offer bonuses or profit-sharing plans that give employees a stake in the success of the business. Finally, offer your employees enough work to go around. Higher hourly wages mean little if you have to cut your employee’s hours. This also helps motivate your employees to work harder and thus improves overall productivity.
Boost Your Profit Margins
If your prices are rising, but your revenue isn’t keeping pace, it’s time to take a close look at your profit margins. You can start by raising your prices. This may not be possible for all businesses, but it’s worth considering. If your product is in high demand, you may be able to get away with a price increase.
You can also re-evaluate your marketing strategy. Are you reaching your target market effectively? If not, you may need to adjust your approach. To build awareness for your business, create a customized banner for your website using an online banner maker. If you find a banner template that suits your brand, you can customize it by adding text, color, and font as well as adding animation or video.
Use Technology To Automate Processes
One way to offset rising labor costs is to automate as many processes as possible. You can do this in several ways, depending on the type of business you have. For example, if you run a retail business, you can use self-checkout lanes or online ordering systems. If you have a manufacturing business, you might invest in robotics or other automated equipment. Taking these steps helps reduce your labor costs and can also improve efficiency and productivity.
Technology can also be used to monitor your spending. Free or basic accounting programs can help automate your invoices and payouts, track your expenses and tax deductions, and make sure you’re not overspending — all without charging you a sizable monthly user fee.
Overall, you can take a number of steps to inflation-proof your small business. By being mindful of your spending, raising your prices, and reinvesting in your marketing efforts, you can make sure your business is prepared. For help with marketing and public relations, check out Evertise Digital.