How small businesses can confront the challenge of inflation

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The pressures on small business owners intensify during periods of rising inflation. Prices for goods and services increase, while your customers' incomes may not keep pace.

These circumstances can strain businesses, especially if you don't have much room to raise prices.

 Fortunately, there are ways you can make ends meet while dealing with inflation. Here are a few helpful strategies for making it through inflation.

Improve Your Budget Management

Good software helps you keep a tight rein on your budget, so expenses don't get out of hand. Reliable programs like these 8 business accounting tools can help you avoid accounting or payroll errors if the grunt work of managing the business finances worries you.

Choose software that analyzes the data in an easy-to-understand interface. You can save money using free software with basic features like tax deduction tracking and invoicing instead of a subscription plan.

Hold on to Valuable Team Members

According to Terra Staffing Group, the loss of employees increases your expenditures since you'll spend money to advertise vacancies and hire new team members. As you train new employees, your customer service could be impacted, costing you more revenue.

According to Nextiva, the best customer service teams are driven by internal motivation; they are “driven to do great work beyond money and status.”

Find ways to keep your employees contented, such as offering raises, bonuses, promotions, and newer, more challenging responsibilities that will enable them to grow. If you show employees that you value their work, they'll be more likely to stick around instead of looking for greener pastures.

Consider adding a reward system when employees meet specific performance metrics, whether it’s a sales quota, a peer nomination, or anything in between. For example, with this free solution, you can set up whatever metric you want to use and, when employees reach it, the system will automatically send them a gift card reward.

There are plenty of ways to customize the system, so you have tons of flexibility in terms of cost and options.

Increase Your Productivity and Efficiency

Even if you're the most efficient person on the planet, there's always room for improvement regarding productivity. Get the most out of your time with these tips:

Set priorities: Trying to do too much at once only leads to frustration and a lack of progress. In most cases, you should focus on activities that generate income. According to Scoro, it’s important to “evaluate which activities return the highest reward.”

  • Simplify your process: The more steps there are in a process, the more likely it is that something will go wrong. If your complex processes are getting in the way of value creation, it’s time to simplify them.

  • Automate where possible: Let machines do any task they can do well, freeing up your time and employees' time for more critical assignments.

  • Delegate where possible: Don't try to do everything yourself. If you have team members, delegate tasks to them so that you can focus on more important assignments.

Build Your Cash Reserves

Building your cash reserves is key to financial security because when unexpected expenses come up, you'll have the money you need to cover them without going into debt. If you face a major financial setback, your cash reserves will help you stay afloat until you get back on your feet.

Start by setting aside a fixed amount of money each month to build your cash reserves. You can do this by setting up a separate savings account or earmarking a portion of your business income. Once you have built up a decent amount of money in your savings account, start investing it in a short-term certificate of deposit or a high-yield savings account to earn interest on your money.

Use an Ecommerce Platform to Sell Online

Selling online has never been easier than with the use of a unified ecommerce platform.

Gone are the days of having to piecemeal multiple solutions together hoping for a functional and effective store. With a unified platform, all the necessary components—from store setup, inventory, marketing, website management, and even payments—come together in one cohesive solution that is easy to implement and maintain and provides massive time efficiencies and cost savings.

Diversify Your Revenue Streams

When the economy is struggling, it's more important than ever for small business owners to be creative in their pursuit of revenue.

Try these ideas:

  • Offer services or products that are not impacted by inflationary trends. 

  • Create a subscription service for your product or service to offset increases in the costs of goods and materials. You can use this process to get started.

  • Get creative with pricing. If your costs have gone up, consider implementing a tiered pricing structure that allows customers to choose the level of service they need.

Make Strategic Choices

Inflation can cause problems, but if you put the right strategies in place, then your business can weather the difficulties.

 Try improving your efficiency and diversifying revenue streams, and don’t take what looks like the easy out by laying off employees. In times like these, it’s best to do your research and be strategic about your choices. If you do, you are likely to come through economic downturns with flying colors.