During the first quarter of 2022, 85 percent of small business owners said their business was affected by inflation, and 67 percent were forced to raise prices, according to the U.S. Chamber of Commerce.
Inflation can be catastrophic for small businesses, and many owners are worried. However, small businesses can be more flexible and responsive to shifts in markets and in demand than their larger counterparts.
Here are some steps to take:
- Resist the urge to wait it out. Financial adjustments may be needed. It’ll take awhile for things to get back to normal.
- Streamline and automate processes. This could mean organizing products with new shelving or using new software to automate order taking, billing, and collecting payments.
- Analyze profit margins on a product or service basis.When were prices set? Are there regular reviews to make sure they’re adequate?
- Look for opportunities to save. If the business is paying for products or services that aren’t being used, cancel those items. Consider substituting materials. Take a look at office space, can moving to a hybrid remote/in-office model save?
- Stock up on supplies now. Don’t wait until the last minute to order core materials.
- Develop a process to raise prices. No one wants to raise prices, however, this may be helpful in combating inflation’s effect. During this period, it’s useful to build in additional wiggle room, as it’s not feasible or advisable to change prices frequently. Choose areas where customers are less likely to notice.
- Be ready for new customers. Your target market may change, so go after those new customers.
- Be flexible and put the business first. Resist accepting smaller margins to assist customers through this difficult time. The business will not be able to sustain the resources it needs to survive.