Six Strategies your small business can use to survive inflation.
If you’re a small business owner, it’s likely you’re feeling the pressure of uncertain economic conditions, rising costs and the impact of inflation within Trinidad & Tobago.
For many small businesses, the natural reaction to inflation is to raise prices for their products or services; however, this can cause you to lose customers and make it difficult to survive in competitive markets post COVID-19 period.
In this blog, we’ll share some beneficial tips and strategies on how to deal with inflation so that your small business is able to survive any financial challenges that come it’s way.
What is inflation and how can it affect your small business?
Inflation is a ascent in prices, which can be interpreted as the decline of purchasing power over time. The rate at which purchasing power drops can be reflected in the average price increase of a basket of selected goods and services over some period. The rise in prices, which is often articulated as a percentage, means that a unit of currency effectively buys less than it did in prior periods. For a small business owner, this can be especially worrying as costs of production or supplies may go up while your customers’ money loses its value, leading to decreased sales and profits.
It’s essential that any business proposal includes actionable strategies to mitigate the effects of inflation. Having insight into how much impact inflation can have on day-to-day operations can help you predict potential problems and when necessary, prepare to adjust. With proper understanding and planning, your small business should be able to remain robust even during periods of high inflation.
1. Initiate automated practices
Leveraging technology to automate as many processes as possible is a great way to cut
production costs. Start by researching programs or software that can be deployed to automate tasks like scheduling, bookkeeping, receiving orders, customer management, marketing, billing and payments. E.g. Artificial Intelligence Technology Solutions (IA). This will allow you and your employees to spend less time completing repetitive administrative tasks, and free up your schedule to focus on more complex procedures such as increasing business profits.
2. Improve workplace productivity
Hold your employees accountable by using apps or other methods to track productivity in theworkplace. The more efficiently your business is running, the higher your profit margins will be. If productivity is lacking, consider solutions such as extra training for employees, and hold regular meetings to review performance or incentives.
3. Cut unnecessary expenditure
Instead of raising prices for your customers, complete a thorough audit of your business expenses to determine where you may be able to cut costs in production. Some suggestions might include cancelling unused subscriptions or services, downsizing your office space or substituting materials. Carefully consider areas that will optimise results with minimal disruption. For goods or services, you can’t afford to go without, research less expensive alternatives or negotiate with the supplier; many suppliers recognise the value to both parties of long-term loyalty, so you never know what benefits could follow an honest, proactive conversation.
4. Evaluate staffing costs
Many employees may expect a salary raise in response to inflation, which isn’t feasible for many small businesses; however, there are other ways you may be able to ease their financial burden. For example, transitioning to a hybrid or remote workplace would remove commuting costs, and potentially allow you to downsize to a smaller, less expensive office space.
5. Educate yourself and your employees on inflation
Inflation is an unavoidable part of doing business, but the more you know, the better prepared you’ll be to face all the associated challenges and risks and remain competitive in a constantly changing marketplace. Educate yourself by investing in software tools or professional services that track these economic indicators and, where appropriate, provide the same education to employees in order to give them a better understanding of their working environment and greater insight when making decisions related to money management.
6. Enlist professional advice
Robley Baynes Tax and Accounting Services has certified and trained advisers who can help you set and achieve your financial goals. Whether you’d like to learn how to use cloud-based bookkeeping to win back more time for your business and personal life or speak to aqualified tax accountant or business advisor to receive tools for making viable decisions and taking control of your business, we’re here to help.
Our wealth organiszation strategies can also assist you in building a long-term financial plan and setting achievable goals, along with other services such as risk management, debt management, investment planning and more.
Hopefully this article has helped you realize that raising prices for your products, goods or services isn’t always the best or only way to deal with inflation. Understanding inflation and introducing procedures to safeguard your small business against it will not only provide more security for your business but can also help you remain profitable and competitive during high