Running a small business back in the unsure times of the pandemic, supply chain problems, unstable labor market, and now high inflation is a real challenge. A challenge that can bring a lot of stress and frustration. Many consider closing their business because of constantly growing economic and psychological costs. It is a rather pessimistic vision that for some can become a reality. However, learn how you can run a small business in times of high inflation rates and still make money in 2023.
How Does Inflation Influence Small Businesses?
At first, it can be helpful to understand what inflation actually stands for. Generally speaking, inflation means nothing else than the increase in prices of goods and services. As a consequence, it leads to a lower purchasing power of money. Or in another word, decreasing the value of money.
What it means for small businesses is basically the growing costs of materials, supplies, and services that are required to maintain a business. To cope with this situation, most small business owners will raise their prices. A business needs to do this to maintain its successful business during this time of higher inflation.
Or, as in for today, they have already done this.
According to Forbes, prices today remain very high. On a month-over-month basis, CPI rose 0.4% in September—following a much softer 0.1% monthly gain in August. However, food prices, housing, and medical care saw higher price increases.
What Are The Reasons for High Inflation?
- Rising prices
- Higher production costs
- Lack of materials
- Surge in demand
- High wages
- Government policies
- Expansion of money supply – feds printing more money
- Higher interest rates
It sounds like we are in the perfect storm here in the United States with higher inflation being reported month after month. What is a small business owner to do?
How To Run A Small Business During High Inflation Rates
Shifting the costs to customers is one of the solutions, probably the most common one. Since you, as a small business owner, are also a customer, it is a process that is also going to affect you.
For example, you may have to lower your own payroll or make your business a home-based business to save more on the higher costs.
To run a business you need to have the profitability to remain successful and stay in business.High inflation rates can also mean narrower profit margins. All those aspects influence the ratio between incomes and expenses and the cash fluidity of your business. #highinflation Click To Tweet
How To Survive Raising Inflation Rates While Running Your Small Business
Saving costs, right next to rising prices, is probably the first thing that comes to your mind when you’re trying to keep your business profitable.
To do this, you can try to keep your inventory at a minimum. You can also try to downsize your offer. Another idea is to change the suppliers to local ones and as a result, cut the costs of transportation.
Manipulating the revenue and costs is one way of keeping the profit stable. Look over your budget and see exactly where all your business expenses are going. Then review and ask yourself, are they necessary to maintain and grow my small business?
You can also try and take some other action. One of the best ways is to try to cooperate with other businesses in a form of a joint venture. You want to write a business plan with another business to set it up.
What Is A Joint Venture?
A joint venture is a business form of partnership, but not in a legal way. At least two parties decide to pool their resources to grow their businesses. Look at their business model compared to yours as you will work together to invest your resources.
It is an especially good idea to manage a challenging economic situation. Raising inflation rates affects every small business in your area. It translates into similar levels of motivation among partners to manage the project successfully.
An especially good form of the joint venture is a marketing strategic alliance.
Run a Small Business During High Inflation Rates With Co-marketing In Troubling Times Of Higher Inflation
You can combine your organization’s marketing strategies and resources as a form of joint venture marketing. As a result, you can increase the share of a marketplace and the revenue to market your business.
By cooperating, you get access to the targeted audience of your partners that can become your new potential clients. You can also work more efficiently since you’re sharing your solutions, cash flow, and resources like databases, market research, and employees.
To sum up, it allows you to reach new audiences, raise brand awareness, optimize your marketing strategies and actions, as well as create and reach new business plans.
By teaming up with other businesses that operate in your local area, you add a new dimension to the market and have a greater chance to keep your business going in the challenging times of high inflation rates.
It’s a great way to pool your business resources together whether you are marketing a product or service.
Choose Right Technology For Small Business
Marketing is all about reaching your targeted audience even while you run a small business during high inflation rates. The reasons why you want to do this and your goals might differ. But chances are that most of your actions will take place online.
To be honest, most of your actions should take place online, since it’s so much cheaper than using more traditional advertising channels. Optimizing your online marketing strategy is a great way of saving money and reaching new potential customers.
Yet be mindful, that your old social media channels or websites might not be enough to successfully implement your new strategy. Creating new, more suitable space might be necessary.
You want your new marketing plan to be profitable, so it has to be well-thought-out and performed. At the same time, you want to keep the expenses as minimal as possible. Thankfully, creating a new website or a landing page where you can clearly inform your customers about your offerings has never been easier.
Do It Yourself To Avoid High Inflation
You can actually do it yourself by using a website builder and CMS software like WebWave. You don’t have to be a graphic or a web designer to do a professional website. Choosing the right technology is also a game-changer in the process of cutting expenses. No technical assistance is needed either.
Because you don’t have to outsource the task, you are saving time and money. The two values that matter the most in times of a bumpy economy for most businesses.
Working with a web designer takes a lot of time and actually doesn’t guarantee that you will be pleased with the result. Communication is key, but also a challenge for some.
If you decide to create a website by yourself, you have full control over what you want to create. Choose from one of the dozens of templates and customize it to the idea that you have for your business.
No coding skills are required to build your web presence. Ask yourself, how much money you want to save to make your decision.
If your company is a brick-and-mortar only, think about how you could expand your business into an online business.
Be smart and use the best solutions when doing business. Save time and money and your business in the long run.Because you don’t have to outsource the task, you are saving time and money. The two values that matter the most in the times of a bumpy economy for most businesses. #highinflation Click To Tweet
Conclusion Of How to Run A Small Business During High Inflation Rates
Managing a business in such a testing situation is a tough job. The best thing you can do is to be cautious and aware of both threats and opportunities. Do what you can to save your existing customers for it costs more to obtain new customers. Furthermore, ask for referrals.
When you get a chance to take more action and not just be a distant observer of developing events, make sure to analyze your options. Look for smart solutions that will help you benefit from them at a low cost of energy and resources.
Don’t be afraid to step outside the box and do something different as you run a small business during high inflation rates. Take advantage of the technology and networking as your manage your small business.
Your Turn on How To Run a Small Business During High Inflation Rates
How are you to run a small business during high inflation rates? I’d love to hear about it in the comments below.