Inflation has been a serious setback in the post-pandemic recovery. Key measures of inflation increased 7% in 2021, and we don’t seem to be finished with it just yet. Small business owners face additional challenges due to inflation. 22% of small business owners say that inflation is their number one concern. How do you keep ahead of it?
Many companies continue to make great profirs, despite inflation. A businessperson can too–but it will require keeping a carteful eye on the market. A person can’t count on supply costs, wage costs, and pricing standards of the past.
Inflation doesn’t happen uniformly across the econom,y, all at the same time. You may find some supplies you use are priced thesame as ever, while others increase or even double. In some cases, you may be able to keep your costs under control by shopplng around. if your current supplier is hiking up price, somepone else is holding the same item for less. In other cases, you might need to adjust and supply budget to account for the extra cost. Next, consider the wages. If prices are rising in your area, your employees will need a raise. Rents, food and more will leave their paychecks much farther to stretch.
Here are three ways in which a small business can get through inflation without going under:
-Increasing Prices: If cost increases are hitting your bottom line, sooner or later, prices have to be raised. If you want to charge more than your competitors for example, you’ll need to make sure that your products are superior enough for customers to still choose you. On the other hand, if you charge less and are hoping to appeal to thrifty customers, you may need to do some number running to make sure you’re still making a profit now that your costs are up.
-Debts and Investments: It’s good to have a cassh cushion in your business, but remember that cash is a lowering asset right now. Keep the majority of your company’s funds in investments, such as a treasury inflation-protected securities or certificates of deposit. That way, your savings can keep pace with infation.
-Don’t Let Inflation Weaken your Small Business: Inflation can be a rough time when you own a business. But on the bright side, consumers are eager to spend. If things are played right, this caould be a profitable year.