Inflation and my small business – What can I do?
Every small business owner reaches that point in the month when it’s time to pay the bills – it’s time to stop and face the music. As we sit in front of our computers, we watch our revenue turn into expenditure after expenditure until we’re left with a balance that should be our payroll. This is what we take home. This is our reward for a hard month’s work.
That number at the bottom of the page is shrinking for many of us. We are not keeping up with the game as it accelerates. As if the market forces are working against our goals of making a living and providing for our families.
That’s because it’s true. In the US, the consumer price index rose 9.1% – a 40-year high! That means our take home is shrinking unless we act now to protect what we’ve built.
We often forget some commonsense adjustments we can make during times like these. For your family to survive this time of rising expenses, here are four things you can do TODAY:
4 Ways to Fight Inflation in Your Small Business
Raise Prices
When is the last time you raised you prices? You need to do it again if you don’t know the exact date and it wasn’t within the last 90 days. In order to cover expenses, we need to bring in more money. Currently, we don’t have many options. There is a common response to the assertion that you should raise prices: “I’ll lose customers.” Don’t bet on it. There are price increases everywhere and you are not the only one to present them to your customers. Furthermore, if you provide a valuable service to your customers, they will continue to do business with you. I’ll give you a slight reprieve below if you’re really worried about raising prices on your most-crucial customers.
Cut Expenses
Again, a no brainer! How long has it been since you combed through your bank statements and PayPal charges to find expenses to cut? I have a tendency to purchase a lot of software programs but never use them. The last time I checked my credit card, I found $60 a month. It might not sound like much, but it can buy some groceries or gas for the family. Sometimes we overlook the importance of pinching pennies when it’s appropriate.
Negotiate with Vendors
When you write the check, you have control. Reach out to your most important vendors and propose an extension with a discount. Those vendors who provide their services month-to-month would probably welcome the opportunity to lock in a client for six to twelve months. In addition to a long-term discount, you might even consider a prepayment option to lower the expenditures further if your operating expenses allow it.
Negotiate with your Best Clients
This is the other side of the vendor conversation. How would it affect your business if one or two key clients left? It might be worthwhile to approach your best clients about locking them in for longer periods of time. The certainty of your income comes with an emotional investment, even if you have to offer some discounting. It’s a balanced approach, but the overall goal is to survive this uncertain period without losing our sanity.
