The U.S. economy roars back as the pandemic recedes further into the distance. But, just as businesses are once again back in the office and hitting their stride, they now feel the weight of inflation. The U.S. Chamber of Commerce’s Q4 survey showed that 71% of small business owners are seeing steep increases in their prices and overhead, ranging from the cost of raw materials to services to other products.
Economists believe this could be long-term, which will pose another hurdle for small and medium-sized businesses to jump. It sounds like bad news for the bottom line, but the experts also believe that companies have options to meet this latest challenge.
Raise prices
Inflation may prompt businesses to look around and see what competitors are charging. If a business’s current prices are low, it may raise prices without losing customers since their increased rates are still competitive. An explanation for doing the increase can be a truth that everyone else can relate to: We need to raise our prices to survive in this current market. Owners may also garner goodwill by offering “last-chance” promotions before prices increase.
Review your operations
Many owners and managers have spent the last few years finding innovative ways to pivot to new products, cut overhead or find new ways of doing things. This sense of innovation can continue by doubling down on new successes, expanding where there is an opportunity, or renegotiating agreements, prices and conditions with partners. Those with supply chain challenges may need to buy in bulk, perhaps at a new lower negotiated price.
Look at your finances
Banks offer incentives to buy new financial tools and services, such as high-yield business savings accounts or credit card reward programs. There may be opportunities to refinance debt. Still, be mindful not to over-extend.
Avoid making mistakes
They say that fortune favors the bold, but it is still wise to work with an attorney when revising business agreements or contemplating new business opportunities. They can help ensure that these changes do not have any unintended legal or financial consequences.