Navigating the uncertainties of an ever-changing market should be an essential focal point for businesses. At any given moment, internal and external factors can impact operations and, thus, a company’s performance. There’s likely no better example of why contingency plans and adaptability are vital to businesses than the global pandemic in 2020. The brands that survived were those that honed in on their strengths, took advantage of outside resources, and made wise investments to continue meeting the needs of their customers.
Unfortunately, as with any horrific storm, the pandemic left remnants and destruction like supply chain issues and inflation, causing economic hardships for consumers and businesses. As the cost of goods and services skyrocket and discussions of a potential recession intensify, business leaders must find effective ways to cut costs and protect their assets without hindering the customer experience.
Surviving Inflation
How do you survive inflation as a small business owner? While raising the cost of goods and services may seem like the only solution, there are other options worth considering. Continue reading to learn more.
Eliminate Unnecessary Expenses
One of the easiest ways small businesses can save money is to reduce or eliminate unnecessary expenses. These are one-time or ongoing purchases of products, services, or resources that serve little to no purpose to your organization. Although every business is different, some of the most common things companies waste money on include office space, technology, equipment, team member perks, and business travel.
Once you’ve identified wasteful spending, develop ways to cut back or eliminate the expense. For example, businesses can save thousands of dollars by transitioning to a remote workforce, as you won’t have to pay for commercial space, property insurance, and utilities. If your small business requires a brick-and-mortar location, shifting to a hybrid workforce can reduce your expenses amid inflation.
Reduce The Cost of Essential Costs
Another way to save money and protect your business during inflation is to reduce the cost of essential products, services, and resources. While eliminating these expenditures would render your business “inoperable,” being mindful of how much you spend is crucial to surviving during inflationary periods.
Take logistics, for example. Many small businesses use shipping carriers (USPS (News - Alert), UPS, FedEx, Amazon, etc.) to deliver products to customers. Unfortunately, very few monitor how much they’re spending on these services. More importantly, they fail to evaluate whether it’s a worthy investment. Overlooking these factors could ultimately lead to money going down the drain.
Small businesses can stretch their budgets further by investing in logistic intelligence solutions. What is logistics intelligence? It’s a digital platform that combines logistics with AI to automate warehouse and shipping operations. These systems collect data and aggregate reports that enable business owners to identify waste and save money without hindering the customer experience.
Prioritize Team Member Satisfaction
Team member morale and retention are essential during inflation. As your business wouldn’t be where it is today without the expertise and support of your team, you must continue to prioritize their needs during difficult times. Dissatisfied staff leads to low morale, poor performance, slowed productivity, and high turnover rates, resulting in higher company expenses.
Inflation has significantly impacted households nationwide as consumers struggle to afford the bare necessities. While you may not have the budget to give everyone a raise, there are things you can do to ease your team’s frustrations. For instance, implementing remote or hybrid work schedules would reduce your staff’s commuting costs.
Other suggestions include transportation stipends, financial coaching services, wellness programs, flexible spending accounts, career development, promotions, training, and automating tedious tasks. Making such investments in your team boosts morale, enhances loyalty, and improves performance, productivity, and sales.
Small businesses have taken a beating over the past few years as they struggle to navigate unpredictable and substantial external factors ranging from a global health crisis to inflation. As the potential of a recession increases, business leaders need to be prepared to weather yet another storm. Eliminating unnecessary expenses, lowering essential costs, and prioritizing team member satisfaction are practical strategies small businesses can use to improve their financial health and increase their potential to get through economic uncertainty.
