..

Annual inflation remains stubbornly high, at 7.2 percent. The main drivers are household costs, such as rent and maintenance, higher food prices, and building costs.

Inflation has really ballooned worldwide, and there’s no question that small businesses are feeling the pinch. Supplies cost more, employees are hard to find, and your profits are shrinking.

It’s undoubtedly challenging, but you can weather the storm with the following tips.

1. Study your data

Your numbers are always super helpful, but in times of rapid inflation, you’ll be especially thankful if you keep a nice, clean set of books. Analyse your data to learn what products and services make you the most money, which ones cost the most to offer, which you make no money on and to identify where you can save.

2. Cut expenses

Now that you’ve identified where you can save money, you need to go ahead and cut what costs you can. It’s nice to be able to offer many products and services, but
this is a time to tighten your belt, and sometimes less is more.

Focus on the items that keep your business as healthy as possible, and ditch the rest – at least for the time being. It’s okay to simplify, especially when times are tough.

3. Adjust your prices

Nobody likes to raise their prices, but the reality is you likely have no choice. Keeping prices the same would indeed be wonderful for your customers or clients. However, if you’re offering your products or services at the same prices as before inflation started to climb rapidly, you’re absorbing the cost.

When you dig into your data, you may find that some things you offer actually cost you a lot of money. That’s not a sustainable business model – raise your prices to keep yourself afloat, or find items that cost less for you to sell.  In saying that, make sure you provide your clients with plenty of notice of the increase, so it doesn’t come as a surprise to them and they can adjust their prices accordingly too.

4. Simplify and automate

If aspects of your business take a long time to complete, see if there’s anything you can do to reduce those hours. Look at your systems and processes.  Switching to cloud accounting or inventory management software would be excellent examples, as doing so would allow you to use your valuable time elsewhere.  It also helps with business continuity, a good thing when dealing with floods and other states of emergency events.

Identify where you can simplify and automate, and then do it. Then, even when inflation comes back under control, you will undoubtedly find that the saved time helps.

5. Focus on your customer

Remember that your customers are keeping you in business and experiencing inflation in their lives too – both at home and in their own businesses.

Keep the lines of communication clear and open, especially if you’re going to alter your offerings or raise your prices. It’s a lot easier to retain loyal customers than it is to gain new ones, so make sure they know how much you value them and communicate openly to maintain their trust and loyalty.

6. Consider your employees

Good help is hard to find. Those who work for you are feeling the pinch as well. While it’s essential to automate what you can, you must consider the consequences it will have on your staff. Identify how you can better use their talents if parts of their roles become automated.  Keep up the communication with them too.

7. Remember, this will pass

Inflation has happened before and will undoubtedly happen again after this. Historically, periods of inflation last anywhere from a few months to several years. One must adapt and adjust to the current times as we traverse through.

Final thoughts

While inflation is difficult for small businesses, there are steps you can take to reduce its impact. Focus on what you can control and face what you can’t with confidence and creativity. With some planning, clear communication, and smart adjustments, you will come out of this inflationary period intact.  If you would like to know how to take control of your numbers and get some help to dig a little deeper into them, then contact us to arrange some Financial Fitness Training.