Many small business owners feel the pain firsthand of high inflation rates, rising wages, supplies, and the general cost of operating. The bottom line is that when inflation rises, every aspect of a business becomes more expensive. With so many cost increases, what can your small business do? We recommend the following strategies to minimize the impact of inflation on your business.

Ways to cope with inflation as a small business owner: 

1. Reduce expenses where you can

   By identifying and cutting expenses, small business owners can mitigate the impact of inflation on their business’s operating costs. Running an expense audit is an efficient way to identify areas where costs can be reduced without compromising core operations For instance, restaurant owners should ensure they aren’t over-ordering, should look to see if different vendors have lower costs, and may want to consider using less expensive ingredients in the recipes. 

2. Renegotiate contracts

   Small business owners can opt to renegotiate contracts with their suppliers to hopefully secure better terms or discounts. Your vendors value your long-term partnership and may be happy to work with you. We’ve also seen some clients negotiate discounts with landlords.

3. Adjust pricing strategically 

   Although nobody wants to pay higher prices, this is a time when consumers are both prepared for higher costs and potentially in a better position to deal with them. Small business owners should carefully review and adjust their pricing strategies to reflect increased costs due to inflation. Maybe consider segmenting customers based on price sensitivity and then adjust prices accordingly. Or maybe you decide to promote special offers to help offset increased costs. No matter what steps small businesses take, they should always communicate their value proposition to justify their price increases. 

4. Embrace efficiency and productivity

   You’ve no doubt heard the expression, “Work smart, not hard.” While every successful small business owner also works hard, you can actually counteract the effects of inflation if you can streamline your operations to make them more productive. Consider additional training for your workers or implementing apps, AI, or any additional type of technology that will make your company’s efforts translate to more dollars for less work. 

5. Verify that you are working with the right financial companies 

   At a time when small business owners need to be more wary of their cash flows, they should evaluate the rates and fees that their banking partners are charging. It may be the time to make some changes as finding the right partners can make all the difference between generating profits or enduring losses. A reputable lender that understands your business inside and out could be just the partner to help get you through this period of higher costs.

What are business loan options?

As banks charge a premium for lending and approve loans based on credit scores and incoming revenue, lending brokers such as Shore Funding offer financing options to businesses that may not want to or cannot apply for a loan through a bank.