Inflation occurs when prices rise across the economy, decreasing the purchasing power of your money. High inflation has a significant impact on businesses. Rising supplies and services costs make running a business more expensive. Business owners are then forced to raise their prices to counter inflation.
This can lead to losing customers as they try to save their own money. Many business owners have been forced to cut overhead expenses by reducing their inventory, cutting marketing costs, and looking for other ways to save money. Rising costs also result in tighter profit margins. This makes it harder for businesses to reach their margins and remain profitable over time. So how can you maintain your business during these challenging times?
Raise prices
This is first on the list, and many businesses have already taken this step. However, you should avoid raising your prices across the board and instead raise them only on the products that impact your margins the most.
Consider shrinkflation
Shrinkflation is the practice of shrinking your products and packaging while selling them at the same price. This is already being practiced by big companies and can be found on the shelves at the grocery store. Shrinking cereal boxes and thinner toilet paper rolls result from shrinkflation. Small businesses can benefit from this practice as well to cut costs.
Stock up
Stock your shelves with anything with low holding costs before prices rise even more, which they are expected to. Today’s prices will probably feel low by next year.
Keep your employees happy!
Employee retention is a critical part of your inflation survival strategy. Losing employees now means you’ll have to use precious money to advertise, hire and train new employees who might not even stay for long. Find out what your employees want regarding job benefits and scheduling, and keep them showing up.
Get financing
There are many loans to choose from that can help your business deal with high inflation. Interest rates are also expected to climb, so get a loan sooner than later. If you need business financing, we can help.
First Union Lending is Here to Help You
First Union Lending offers numerous financing programs designed with small businesses in mind. Our business loans are fast and flexible, with financing options ranging from $5,000 to 2 million dollars.
Call today to learn more about our various financing solutions to help your business grow and become successful.