A small business could find its profit margins dwindling during times of inflation. Materials might cost more and professionals are asking for higher pay rates due to the financial strain. Figuring out what to do during this time to survive is about being creative and tightening up expenses in other areas. Relief does not look like it is on the horizon with new bills in line that will tighten up taxing small businesses. Corporations seem to be getting another pass with record profits while receiving massive breaks on taxes. Consumers see this happening and would rather work with a small business than a worldwide company. The following are tips to help you run a small business successfully during times of inflation.
Budget For The Unexpected
The unexpected can happen at any business and it needs to be budgeted for. The emergency fund for a business is so essential during inflation or times of sudden economic change. A company car getting damaged is a perfect example of something that might have a few hidden costs. Sunroof repair can be quite affordable with the right company and if your sunroof was damaged by a car accident. A vehicle out of working condition can impact revenue negatively on a daily basis.
Expected costs can include gas although these prices have dropped/stabilized a bit during the last few months. Prices were raging to the point of disaster with some states having prices of up to $10 per gallon.
Adjusting Prices
Prices can be impacted by a number of factors with gas mentioned above impacting the price of nearly everything shipped. Adjusting prices is a part of a business but some margins can maintain pricing due to large margins. Keeping prices the same for clients that have signed contracts is a part of a contractual obligation. A business might find it is better to avoid signing long-term contracts as prices seem to be skyrocketing for certain products or services.
Enlisting The Help Of Freelancers To Scale
Freelancers can be used to scale instead of hiring full-time employees at this time. You do not want to have morale destroyed by employees talking about wages. You do not want a person that has been with the company for years to find out a new hire at the same position makes more money. Figuring out how to pay employees appropriately is a part of business. Any annual raise that is under the percentage of inflation should be considered a decrease in pay by an employee.
Retention of current employees is so important as people are more than willing to resign or quit without notice. Professionals usually only quit without notice if they feel like a company has wronged them in some capacity. This does happen on occasion when an employee is quietly unhappy despite being treated well. Entitled professionals are not a thing of the past as some think they should be promoted annually due to the misinformation spouted out on platforms like LinkedIn.
Small businesses are being squeezed by inflation. Use the tactics above to help stay afloat until this time stabilizes.