As a business owner, the last thing you want to do is see your expenses higher than your income. Or to see your profits dwindle. Currently, inflation is at an all-time high, which means everyone has been paying more for just about anything. If you have seen higher costs in your business, you may be thinking there is nothing you can do and you must simply accept that you will be losing money each month. However, there are a few things you can do to prepare for the higher costs in your business.
Inflation: What Your Business Can Do to Prepare for Higher Costs
Automate Tasks
There are certain tasks in every business that can be automated, thanks to advances in technology. If your company has not embraced automation yet, you may want to consider it. Instead of having an employee type up the same email to multiple clients each day, have those emails automated. Simply create a template that can be personalized and schedule the emails to go out at specific times. The same can be accomplished with invoices. The best part about automating these tasks is it frees up an employee to work on other things, which may offer better productivity within the business.
Expense Visibility
Not everyone is aware of every single expense their business has, which may be fine during normal times. However, when inflation is on the rise, it is imperative that you know where all of the money is going in your business. Understanding your expense costs may allow you to see what you can either cut back on or terminate altogether. Be careful if you do terminate expenses though. Simply cutting certain expenses without having a plan may cause your business to lose more money in the future. So, stick with your long-term plan and only make the cuts that make sense.
Assess Your Supply Chain
Over the years, you have probably formed relationships with a couple of favorite vendors. Yet those relationships may have become strained recently, due to supply shortages. You may feel loyal to the vendors you have worked with, but if they cannot get your supplies, or their costs are a lot higher, you may have no choice but to look elsewhere. It is recommended that you begin to alternate suppliers and even stockpile those items you have had difficulty finding in recent months.
Renegotiate Contracts
If you have any contracts coming up for renewal in a few months, or even a couple of years, now is the time to do a little renegotiating. Many companies may offer you a lower price if you lock in rates early or sign on for a few more years. You may even be able to negotiate flexible pricing that will have you paying less in the future once inflation evens back out.
Continue to Grow Your Business
A few businesses may think that they should stop creating more services or products during times of inflation. But this is actually the time to continue to grow your business, by attracting new customers. You can do this by offering new products or services, or by simply running a new marketing campaign that shows you are different from your competitors.
Analyze Profit Margins
Keeping track of your business’s profit margins is important. Every business owner should know how their profits have been affected since the higher costs from inflation began. Analyzing your profit margins is the only way you can know what changes you must make within your business without sacrificing the service or quality you offer.
Increase Your Prices (Slowly)
No business wants to increase their prices, but honestly, all businesses must do that right now. I recommend starting slowly with a few items’ prices being raised a little bit. This way your customers won’t panic, because they won’t be paying that much more right away.
Higher costs for everything are here, which means you must begin to tackle your response to inflation today. Implement as many of the above measures in your business as soon as you can, so you don’t find your business in a worse situation later this year. I understand this can seem overwhelming, so if you need assistance in understanding where your business is right now, contact the office today to schedule a consultation.