Inflation And My Small Business
Contributed by Idea Collective Member:
Inflation and my small business - What can I do?
Every small business owner reaches that point in the month when it’s time to pay the bills – it’s time to stop and face the music. As we sit in front of our computers, we watch our revenue turn into expenditure after expenditure until we’re left with a balance that should be our payroll. This is what we take home. This is our reward for a hard month’s work.
That number at the bottom of the page is shrinking for many of us. We are not keeping up with the game as it accelerates. As if the market forces are working against our goals of making a living and providing for our families.
That’s because it’s true. In the US, the consumer price index rose 9.1% – a 40-year high! That means our take home is shrinking unless we act now to protect what we’ve built.
We often forget some commonsense adjustments we can make during times like these. For your family to survive this time of rising expenses, here are four things you can do TODAY:
4 Ways to Fight Inflation in Your Small Business
When is the last time you raised you prices? You need to do it again if you don’t know the exact date and it wasn’t within the last 90 days. In order to cover expenses, we need to bring in more money. Currently, we don’t have many options. There is a common response to the assertion that you should raise prices: “I’ll lose customers.” Don’t bet on it. There are price increases everywhere and you are not the only one to present them to your customers. Furthermore, if you provide a valuable service to your customers, they will continue to do business with you. I’ll give you a slight reprieve below if you’re really worried about raising prices on your most-crucial customers.
Again, a no brainer! How long has it been since you combed through your bank statements and PayPal charges to find expenses to cut? I have a tendency to purchase a lot of software programs but never use them. The last time I checked my credit card, I found $60 a month. It might not sound like much, but it can buy some groceries or gas for the family. Sometimes we overlook the importance of pinching pennies when it’s appropriate.
Negotiate with Vendors
When you write the check, you have control. Reach out to your most important vendors and propose an extension with a discount. Those vendors who provide their services month-to-month would probably welcome the opportunity to lock in a client for six to twelve months. In addition to a long-term discount, you might even consider a prepayment option to lower the expenditures further if your operating expenses allow it.
Negotiate with your Best Clients
This is the other side of the vendor conversation. How would it affect your business if one or two key clients left? It might be worthwhile to approach your best clients about locking them in for longer periods of time. The certainty of your income comes with an emotional investment, even if you have to offer some discounting. It’s a balanced approach, but the overall goal is to survive this uncertain period without losing our sanity.
It’s easy to get caught up in making widgets and forget that we have some operational control over our personal outcomes. The economy will do what it will do, and we will not be able to fix it. However, we can do our best to control our future by being intentional. If you implement these four strategies, you will see an increase in your monthly cash flow, more certainty in your ability to deliver, and a boost in your personal peace and wellbeing. That’s a hearty ROI, if you ask me.
If you’d like to talk more about your small business, join the Idea Collective and benefit from the brilliant minds of its members.
Founder of the Idea Collective Small Business Incubator
Pat spent two decades in broadcasting management and hosting. After leaving the radio industry, he spent time consulting small businesses and realized the support system for entrepreneurs was broken. Where could you find help for improving small businesses and building real connections with other like-minded people. In June of 2020, the Idea Collective Small Business Incubator was born.