How Should My Business Combat Inflation?

 
The cost of business is always going up. Between supply chain complications, rising wages, and increasing material costs, inflation is unavoidable. Recent statistics point to an  8.6% increase  in consumer pricing from May 2021 to May 2022, and employers large and small are noticing the fluctuations in the economy.
 
As a business owner, the first question you are likely to ask is, “How should my business fight inflation?”
 
From streamlining your finances to reevaluating your pricing strategy, there are several ways to protect your profits and hedge against climbing inflation. This article will provide you with actionable advice and practical insights to secure your business for the near and long term.
 

Target Areas for Reinvestment

 
You might think that a period of high inflation would be a bad time to double down on investments. On the contrary, it could be the wisest decision you make. Notably, inflation reduces the value of your liquid capital, meaning that money could be put to better use within your business where it could retain or even accumulate value.
 
Consider the following areas for potential reinvestment:
 

• Technology  – From project-management software to cybersecurity, there are several avenues for expanding and refining your business’ digital infrastructure. Modernizing your business tools can provide a great return on investment while simultaneously boosting efficiency.
• Marketing  – While some businesses may struggle to take on new clients or add revenue streams during high inflationary periods, you stand to benefit from securing a larger and more active customer base via marketing. Craft materials that will appeal to your target demographic and explore various mediums (e.g., digital, print, video) to determine what might garner the best response.
• Hiring and training  – If your business is continuing to expand and onboard, it may be worthwhile to reexamine your procedures and training materials. By investing in your onboarding process, you may be able to speed up employee turnaround time and increase your business’ overall efficiency.

Streamline Your Operations

 
Too often, the status quo remains until it is challenged. Rising inflation could be a powerful motivator to pay close attention to your operations for opportunities to streamline and enhance daily functions on a daily basis.
 
Key areas of interest could include:
 

 
• Automation  – Save time and labor by looking for areas for automation. From customer email to order processing, modern software offers businesses the ability to simplify repetitive tasks with ease.
• Internal communications  – Between task notifications, emails, and chat channels, businesses have several options for keeping teams in touch. In the best-case scenario, a multivariate communication network ensures further connection, but you also risk redundant messages and slow response times. Review your internal communications with insights from your team to keep operations running smoothly.
• Responsibility and delegations  – Ensure every team member knows their responsibilities, and meet with your managers regularly to discuss task delegation and smooth transitions between departments.

Curb Business Spending

 
No matter the economic situation, a business needs to earn more money than it spends. If high inflation has you worried about finances, there are several options to sure up your venture against stalled income and slowing sales.
 
Key ways to eliminate excess spending include:
 

• Reviewing service contracts  – Internet, phone, maintenance, and other business services can add up quickly. Lay out your monthly service expenses in a spreadsheet to track your total expenditures and consult with service providers about lowering your payments or canceling unnecessary services.
• Outsourcing finances  – An accounting department should save your business money. Unfortunately, the costs of hiring and maintaining a financial department can become a major burden for business owners. With outsourced CFO services, businesses can opt for highly-efficient accounting services without the expense of full-time bookkeepers, accountants, and internal managers.
• Limiting travel  – Local, national, and international travel can add up. With the advent of inexpensive and intuitive telecommunication technology, you can avoid the airport and streamline your connections to customers, collaborators, and business partners.

Work on Employee Retention

 
Losing valuable team members during a period of high inflation is a detriment to your overall business. While it is important to focus on your new hires, you can also work to ensure your current employees are satisfied and empowered to succeed.
 
Explore the following options for activating and retaining your current team:
 

 
• Incentive-based rewards  – High inflation could make it more difficult to offer widespread raises and bonuses within your business. Still, you may be able to create opportunities for your employees via incentive-based rewards. Consider sales bonuses, overtime options, or inventive ways to recognize and compensate your team for going above and beyond.
• Offer flexibility  – Work-life balance is integral for modern businesses interested in holding on to the best and brightest team members. With flexible scheduling, work-from-home options, and intuitive collaboration, you can provide more comfort to your employees and increase productivity.
• Know when to let go  – It is always difficult to let go of any employees, but tough economic times can require a stern look at the structure of your business. If you have redundant positions or employees that are not meshing with your company values, it may be time to consider cutting positions or transitioning team members to new departments.

Refine Your Pricing Strategies

 
As the prices of other goods and services rise, it may be time to do the same with your business. Now may be an excellent time to review your pricing. That said, it is crucial to keep your pricing competitive to preserve your existing customer base.
 
Consider these creative pricing strategies to protect profits without losing sales:
 

 
• Subscription services  – Depending on your industry, monthly contracts and subscription offers may be the best way to bring consistency to your cash flow. You can even explore a range of subscription options, ranging in prices and services, offering your customers a highly customizable way to connect with your business.
• Bundled offers  – Bringing the consumer more for less is a well-tested way to sure-up profits and expand sales. Multiple services or products for a single price can bolster purchasing incentives for new and current customers.
• Customer rewards  – Encourage recurring interactions with your customer base by crafting a reward system. Purchasers may find themselves returning to your business, knowing that each sale will contribute to future discounts or gifts.