In recent days, we are seeing record inflation figures in North America, with the consumer feeling the pressure at the gas pumps to the grocery stores. But the impact for small businesses is more extreme with higher costs on all their input material and services, not to mention the shortages due to supply chain issues.
Surviving in the market takes careful planning and consideration by business owners. It takes innovative approaches to address supply chain or staff shortages with a focus on more automation and alternative sources for materials.
What Steps Should Be Taken?
The first response to increased inflation is increasing your prices to your customers to compensate for the higher cost. But what if your customers are sensitive to increased prices and your revenue declines because of price hikes?
To manage the higher inflation and cost pressure it is imperative for the business owner to consider their operating cost. As salaries are generally the highest expense in most companies’ books, that is the “go-to” for many companies, however, your people are also your growth stimulus and the reason for great customer satisfaction.
Changing your focus
Changing your focus to innovative cost savings without affecting growth and customer satisfaction is a great way to combat rising costs for your products. Here are a few short tips:
- Consider any tax grants and rebates you qualify for. These grants and rebates can provide an immediate cash benefit by reducing payroll taxes and range from Hiring Incentives to Research and Development incentives. There are tax grants and rebates for any employer and very underutilized.
- Automate your Accounts Payable and get a rebate for doing it. You need to pay your suppliers anyway, why not get a benefit from doing so? Innovation in the payment industry has come a long way and it is there for even small businesses to take advantage of
- Reduce your employee turnover by making free benefits available to your employees. The average cost of replacing an employee can be very high when you consider the cost of recruitment, training, and lost productivity. In a recent survey, 80% of employees value benefits more than anything else.
- Consolidate your shipping environment. It is time to rate shop and using a single platform for all rates in the market is the way to go to ensure you always have the best rates AND routes for your products
- Make sure you pay a fair market price for your business essential costs like rates and taxes, utilities, internet, and insurance. In most cases, you pay potentially more than your competitor for the same service. By benchmarking your rates, you generate essential savings that can be used for growth
Although we cannot control the factors that drive inflation, we sure can combat these. Thinking about your business and cost in a more innovative way will give you the tools to take you to the next level of growth.