Open a news site right now and chances are there will be one if not several headlines concerning inflation woes. In fact, according to survey conducted for Chartered Professional Accountants of Canada (cpacanada.ca) earlier this Spring, inflation and supply chain concerns are the top two challenges to the growth of the Canadian economy according to business leaders.
So, when everything from the cost of fuel, to supplies to insurance seems to be skyrocketing, what can a small business owner do to survive? Read on for a few options to consider to keep your business in the black.
Change up your Offerings
- You may have seen this in stores – that bottle of pop that used to be $1.49 was 600mL, and now the bottle is still $1.49 but is only 500mL! So, while the absolute price hasn’t changed, the price per unit has increased. This strategy may allow customers to still be able to afford the product you are offering but can help you ensure that your business stays afloat as well.
Find efficiencies
- Time to take a look line by line through your expenses and figure out what is truly necessary, what is nice to have and determine if there is anything that you have been paying for that you do not use. Similar to your personal budget, you may find some services that you are paying too much for.
Optimize your Debt Strategy
- Many small businesses use debt as part of their strategy in running their business. And with the low interest rates over the past few years, you may have taken on more debt than is optimal now that rates are on the rise. Take stock of all the debts you owe and prioritize how to pay them off most efficiently. You may also need to consolidate loans and refinance for better rates if possible.
If all else fails, you might need to face what might seem like the most obvious answer – when the price of your inputs go up, so too would the price of your product or service go up. This would entail just passing any higher costs onto your customers. While we are certainly seeing this customer price increase across many sectors, you may want to consider what items or services make sense to increase the price (i.e., those the customer will continue to want to pay rather than walk away) and which items make sense to make less of a profit or break even on. Your clients are the most important part of your business so make sure to consider all your options!