Last Updated on January 27, 2024 by Asfa Rasheed
Most consumers have felt the negative effects of inflation, but small business owners are getting hit hard too. According to NFIB, over half of all small businesses have been significantly impacted by price increases, and a third have had a moderate impact. Companies must make strategic adjustments, such as streamlining things like newsletters and stocking up on supplies, in order to remain profitable during times of inflation – luckily, newsletters can also be part of that strategy! Digestley.com shares some tips to help your business battle inflation.
- Improve Profit Margins
There are multiple ways businesses can improve profit margins. The most obvious tactic is to increase prices. However, customers don’t always respond well to price increases, and if sales drop off too much, this tactic can backfire. Try justifying price increases by increasing the perceived value of your product.
Avoid the need to mark down products by improving your inventory purchasing process. When you buy or produce too much of a product, you may have to sell it for less to get rid of it, which can shrink profit margins. Try to get as close as possible to carrying only as much inventory as you can sell.
- Streamline Your Newsletter
Streamlining and automation can help you get more production out of your resources. You can use many automation services, but you may want to consider starting small. For example, if you have a newsletter that you send out to your customers on a regular basis, look for ways to streamline that process to save not only money but time as well.
For example, you don’t need to hire a graphic designer to create a memorable newsletter — many online resources and tools can streamline this process. All you’ll need to do is enter your info into a template and then let the generator handle the formatting — click here for a great tool to help streamline your newsletter.
- Stock Up On Supplies
When prices rise, it can be a good idea to stock up on supplies and materials with low holding costs so that you don’t have to purchase these items when prices go up. However, pay attention to how much it costs you to store anything you buy. If you are paying too much in storage, it may negate the savings. Be mindful of over-purchasing. You may lose money if prices go down before you use up your stockpile. - Reorganize Your Debt
Most businesses carry some debt, but during times of inflation, it is a good idea to look for ways to restructure that debt to save money. Pay down high-interest credit card debt or transfer it to cards with lower rates.
Alternatively, Float recommends you refinance your higher-interest debt by consolidating it into a longer-term fixed-rate loan. You may need a second loan on your business property to accomplish this. If your business qualifies, you could benefit from a Section 7(a) fixed-rate Small Business Association loan of up to $5 million for refinancing existing debt or increasing your working capital.
- Avoid Payroll Errors
Payroll errors can cause multiple problems. First, if you aren’t paying your employees accurately, your employees may quit and you could get in trouble with the government. Inaccurate payments could put you in violation of various wage and hour laws.
If you mess up when calculating your payroll taxes, the Internal Revenue Service may penalize you. Overpayments might make employees temporarily happy but could lead to cash flow problems. You may also run into issues with correctly handling wage garnishments, deductions for retirement accounts, and insurance and child support payments.
Investing in accounting software can help you avoid payroll errors. You can also use your software to manage the other financial aspects of your business. If money is tight, you can save money by using free software that includes basic features such as tax deduction tracking and invoicing.
Cut Costs, not Quality
Inflation can be challenging for small businesses in a variety of ways. Fortunately, there are strategies you can employ to help you deal with inflation without harming your business. Find ways to cut costs without compromising on quality, and look for tools to generate newsletters and free software to help you keep track of your invoices and payroll. Any strategies you can find to reduce costs will help your businesses
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