5 Ways to Make Your Small Business Thrive Despite Inflation


5 Ways to Make Your Small Business Thrive Despite Inflation

Inflation hit a 40-year high of 7.5% in January of 2022. Everyone in recent months has felt the repercussions of inflation, but small business owners typically take the worst hit.

The five-following inflation-survival tips can serve as a rudder for your company as it navigates the current economic conditions.

1. Keep Cash Reserves on Hand

Cash on hand can come from different sources, including hard currency, trust funds, and efficiently convertible liquid assets. Inflationary times pose a particular danger to you if you hold onto significant amounts of cash, as it might reduce the buying power of your money. So it's best to consider investing your money to stay up with inflation.

2. Consider Shrinkflation Instead of Changing Price Tags

Shrinkflation refers to the tactic used by major retailers in which they reduce package sizes without reducing the price. Consumers are price-conscious, yet they often miss the small print or don't notice a change in packaging. So, you can leave your price tags unchanged but stealthily reduce the amount of product in each package to help keep your profits steady. In economics, shrinkflation, also known as the grocery shrink ray, deflation or package downsizing, is the process of items shrinking in size or quantity, or even occasionally reformulating or lowering quality while maintaining or raising pricing. A mashup of the terms shrink and inflation, the word. Both Pippa Malmgren and Brian Domitrovic are credited with coining the phrase "shrinkflation."

As an alternative to raising prices to keep up with inflation, shrinkflation enables businesses to raise their operating margin and profitability by lowering costs while maintaining sales volume. Consumer advocacy organizations criticize the practice.


3. Reduce Recurring Expenses

Reducing administrative expenditures can be effective as a further antidote to skyrocketing inflation. Cutting marketing costs and employing technology and automation may be an excellent start.

Online marketing is far less expensive than print or broadcast advertising and has the potential to reach a much greater audience. One way to cut marketing costs is to transition from print to digital. For example, instead of paying a graphic designer and a printing service for a traditional banner, you can use a free online banner designer program to create a unique, attention-grabbing banner for your website. Customization extends to text, color, typeface, and the addition of motion graphics.

To mitigate inflation's impact, consider investing in technology and automation to cut expenses, improve efficiency, and simplify processes. For instance, if you're worried about making mistakes in your company's books or payroll, use accounting software that can handle these tasks automatically. You can save money by adopting free accounting software with essential functions, such as invoicing and monitoring tax deductions.

4. Keep Your Employees Happy

Implement a plan to keep your employees as you weather the inflation storm. If employees start resigning, you'll have to spend a lot of money to replace them. Worse, you'll have a more challenging time meeting client demands. Your company's survival primarily hinges on your ability to interact with your staff. Learn what they want regarding rewards, compensation, and scheduling, then implement those changes to keep them happy and at work.

5. Stock Up

Stocking up on items that don't require much maintenance before prices increase is another strategy to withstand inflation. Although prices are already higher than they were a year ago, reports indicate that the current period of inflation is the most severe since 1982. Buying extra stock now before prices head even higher may be a helpful strategy.

Keeping Up With Inflation

As a small business owner, you're compelled to make difficult choices, such as raising prices and stockpiling inventory, to mitigate inflation's effects. Visit Political Funda for more tips on how to make ends meet when dealing with inflation.

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