A recent study from the U.S. Chamber of Commerce found that 85% of small business owners are concerned about the impact of inflation. Furthermore, 1 in 3 small business owners now rank inflation as their biggest challenge, up from 23% last quarter.
While the majority of all businesses will likely be affected by inflation, it can be particularly difficult for smaller businesses to overcome. But, by being proactive and employing the right strategies, you can significantly reduce the effects of inflation on your small business. Here are 3 strategies to protect your business from inflation:
- Examine Your Expenses Very Carefully
Take the time now to go through your business expenses with a fine-tooth comb. Oftentimes, upon reviewing your expenses, you’ll uncover areas where you can cut back temporarily. Some examples of ways to save are:
- Cancelling subscriptions to newspapers, magazines, etc.
- Downgrading software plans.
- Going completely paperless to save on ink, copy machines, mailing supplies, and postage stamps.
- Reducing your energy costs by installing programmable thermostats, turning off lights when you leave a room, and switching to energy-efficient lightbulbs.
- Shopping around for better prices on insurance plans and essential services.
- Hiring freelancers instead of full-time employees for tasks like web design or content writing.
- Review Your Pricing
Supply chain disruptions, increased material costs, and labor shortages have left many business owners with the need to charge more for their products or services. In fact, more than 2 in 3 businesses report to having to raise prices to cope with inflation. While the idea of raising your prices may scare you, the reality is that with the current situation, you may have to raise prices in the coming months. Here are a few tips for raising your prices without losing customers:
- Offer new product bundles or service packages. It’s always good to think of a product or service that you can tack on to the package that will cost you very little.
- Don’t apologize, but make sure to explain why you are raising your prices well in advance of the increase.
- Be sure to justify the price increase by reminding people of the quality that you provide. You can use phrases like, “In order to be able to maintain the level of service that we provide…”
- Add improvements such as better ingredients for your restaurant or faster turnaround time for a service you provide. It’s easier for people to swallow an increased cost if they are getting something extra like better products or improved services for their money.
- Let your customers know that you are available if they have any questions about the increase.
- Secure Funding
Now is an excellent time to secure a small business loan due to interest rates being low. A business line of credit is one of the best ways to help you combat the impact of inflation. It is like a financial safety net for your business. It’s there if you need it, but you’re under no obligation to use it. You can tap into your credit line to cover almost any small business expense at the drop of a dime. Use it to cover rising inventory costs, to help you stockpile critical items, to make payroll, or simply to improve your cash flow.
Some of the biggest advantages of a line of credit are:
- Draw funds whenever you need them
- Only pay interest on funds you draw
- No prepayment penalties
- No future approvals needed once active.
Having adequate capital can help you minimize the impact of inflation on your small business!
Need help identifying the best financing strategy for your small business during these challenging times? Contact us today at (855) 784-0008 or apply today to get started!