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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