How to beat inflation as a small business owner

Entrepreneurs and small business owners are feeling the worst they’ve seen in a generation. According to the National Federation of Independent Business, small business owners who say they expect better conditions for their companies in the next six months have fallen to a net negative 61%. That’s the lowest drop in optimism since the trade group began surveying small businesses in 1973.

With all this pessimism clouding the business outlook, what’s a small business owner to do? Nav experts have several ways to help you take control of the situation and come out stronger on the other side.

How to help your business cope with inflation

According to the report, more than a third of business owners said inflation is the biggest problem they are currently facing. No wonder, with monthly reports showing that inflation continues to rise at a staggering rate. The June 2022 report had inflation at 8.8%—its highest level since 1981. Rising inflation means higher prices everywhere, which in turn means higher prices for your customers.

But there are ways to deal with the anxiety caused by inflation:

  • Recognize what you can and cannot control. This applies to both your personal life and your business. Inflation is out of your control, but taking control of your business finances is not. Focusing on what you have the power to fix can help ease anxiety throughout your business function and personal life.
  • Remember that this spike in inflation will end eventually. Inflation is an economic constant, but the inflation we’re seeing right now is temporary. The effects may be permanent, but at some point they will stop being so drastic. “When?” is another question, but experts predict that by the end of 2023, the inflation we are currently seeing will slow down.
  • Take control by cutting costs and keeping your head down. This is one option in response to inflation—cut your overheads, cut expenses, save as much as possible and invest in your business if you can. This can increase your cash flow and give you some breathing room until the inflationary storm subsides, while helping you stockpile to weather other economic storms that may lie ahead.
  • Take advantage of the opportunity to grow to outpace inflation. This is another option for responding to inflation – make more revenue to beat inflation (and your competition). You can do this by investing in your business: increase your marketing spend to attract new customers, add new technology to make your business more competitive, and improve productivity and output to increase sales.

Attract workers to join your team

Another of the economic conditions causing concern right now is labor, especially around finding and retaining workers. In fact, half of all businesses are currently hiring, and 94% report that they cannot find qualified workers to fill these positions.

The best way to get employees to join your team is to make it more attractive to work for you. The benefits workers typically want now include better pay and better benefits, but they’re also interested in part-time options, telecommuting and flexible schedules.

But when there’s so much uncertainty, it’s hard for businesses to want to expand what they offer prospective employees. Despite hiring as much as they can, only 3% of businesses say they think now is a good time to expand their business.

One way to increase your appeal to potential employees without spending on benefits or pay is to work on your internal company culture. By making your business a great place to work—and not just with employee discounts or snacks—you can increase referrals and word-of-mouth hiring among your existing employees. Work on offering meaningful opportunities for advancement and development, as well as real team building, to help your employees want to stay (and get their friends to come work for you, too).

Protect your business from recession through uncertainty

Uncertainty still looms over the economy, and small businesses are bracing for a recession. According to a Goldman Sachs report, 93% of businesses believe the US economy will be in recession within the next six months.

There are several ways to protect your business from a recession now, and Nav recommends taking the following five steps to help your business survive the possible coming wave:

  1. Get a type of flexible financing like a business credit card or line of credit to help pay for business expenses.
  2. Invest in growth through funding.
  3. Take advantage of current interest rates – they look high now, but could get worse as inflation continues.
  4. Improve cash flow by reducing payment terms or using invoice factoring.
  5. Consolidate debt and refinance to get lower rates or monthly payments.

Sustaining the future of your small business for the long term

While optimism may be low right now, keeping the pessimism at bay can help you secure a better future for your small business. The fear of recession and the daily reminder of the cost of inflation can be hard to swallow, but they can also provide opportunities for growth.

Reinvesting in your business during a difficult period can see you out the other side even better than before.

Consider these ideas for the future:

  • Improving your company’s cybersecurity and data management through new technologies and policies.
  • Increasing your marketing efforts to expand your customer base.
  • Improving your customer service practices or developing special benefit programs to improve existing customers’ brand loyalty.
  • Create a productive, collaborative environment for your employees to improve retention rates and make your business more attractive to new hires.

Of course, all of these reinvestments will require cash, which you can either secure by cutting costs elsewhere or by seeking financing. Nav helps small businesses get the financing they need, whether it’s a business credit card, line of credit or small business loan. Using our specialized data analysis tools and other information, we find the right financing for your needs right now – helping you prepare for the possible stormy waters ahead. Sign up for a free account today to see your options.

This article was originally written on July 15, 2022.

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