The U.S. Bureau of Labor Statistics reported an 8.5% increase in The Consumer Price Index from March 2021 to March 2022,1 following a 6.8% increase between November 2020 and November 2021. This is the most significant surge in consumer prices since December 1981.2 With this type of gain, along with supply chain bottlenecks, soaring gas prices, labor challenges and stock market fluctuations, small business owners need to take financial precautions or risk struggling under the weight of inflation.
Let’s take a look at a few ways you can weather the storm of inflation while keeping your company, customer base and finances intact.
Boost Your Income
Having a safety net to help out if your business falls on hard times is essential. One way you could generate additional revenue is by investing to keep up with inflation. Options include stocks, savings accounts and bonds with attractive returns. Investing involves risk and earnings are not guaranteed, so you should consult a trusted financial advisor before doing so.
Another option is to hold virtual classes or events to generate income without spending big on renting out a space. This can be a great way to boost income, save money and increase brand awareness and buzz.
Revisit Pricing
While it can be tempting to increase all of your prices to keep up with inflation, it is important to be aware of your customers and your competition. If the costs of a certain item are skyrocketing and you are unsure if it will continue to sell, consider taking a pause. It may also be helpful to examine your supply processes for any issues that could be causing prices to increase.
For your business to survive long-term, flexibility is key. Determine areas where price increases are necessary and modify accordingly, rather than increasing prices across the board.
Automate Labor
From back-end tasks to customer care, leveraging software to automate everyday labor where you can could help you cut costs, reduce errors and streamline operations. Automated service may improve speed and accuracy, which your customers will likely appreciate.
Remote Work and Outsourcing
The COVID-19 pandemic opened many businesses’ eyes to the possibility of remote work: a world where quality employees can work from their virtual office while companies can save on office space. To avoid high hiring costs and acquire the talent your business needs during inflation, consider outsourcing to remote workers.
For more information on the impact of working remotely, read Working from Home: A Guide for Small Businesses.
Get a Loan
In 2021, nearly half of small business owners in the U.S. took out loans to keep their companies afloat during financial crises.3 It’s important to be prepared to overcome any challenge that comes your way. With a business loan, you could tackle increasing expenses, cash flow issues and operational hiccups.
At APGFCU®, we offer affordable business loans to fit your needs. Whether you’re looking for a Business Line of Credit, Term Loan, Commercial Real Estate Loan, Vehicle Loan or Business Visa® Cash Back Credit Card, we have options to help you grow. Visit our website to learn more and apply today. Then, read Five Steps to Secure a Business Loan.
Refinance Your Debt
As rates continue to rise and fluctuate, refinancing your existing debt to a lower monthly payment could help you put more toward your business costs and less toward higher interest. Additionally, having more savings will help you prepare to cover the unexpected and keep your business growing. Discover how we can help you refinance your loan to a more affordable payment.
Visit our Business Banking page to learn more about how we can help your business succeed.
All loans subject to credit approval.
This article has been provided for educational purposes only and is not intended to replace the advice of a loan representative or financial advisor. The examples provided within the article are for example only and may not apply to your situation. Since every situation is different, we recommend speaking to a loan representative or financial advisor regarding your specific needs. Please seek the guidance of a tax or financial professional before investing.
Investment products are not credit union deposits and are not insured by the National Credit Union Administration, are not guaranteed by or obligations of APGFCU, and are subject to substantial risk, including the possible loss of some or all of the principal invested.
1https://www.bls.gov/opub/ted/2022/consumer-prices-up-8-5-percent-for-year-ended-march-2022.htm
2https://www.bls.gov/opub/ted/2021/consumer-prices-up-6-8-percent-for-year-ended-november-2021.htm
3https://fortune.com/2021/12/14/small-business-owners-loans-inflation/