Rising costs present a new challenge to small businesses, which have fewer resources than their larger counterparts. Though trimming costs is inevitable during economically strenuous times, there are ways to adjust your budget to inflation–with no consequence to your employees.
On Season 5, episode 10 of the Survive and Thrive podcast, host Jennifer Ayres shares what small businesses can do to combat inflation without sacrificing company culture.
How Inflation Impacts Everyone
According to the U.S. Chamber of Commerce, 50% of small businesses admit that inflation is their most significant obstacle to financial stability. 71% believe the worst is yet to come regarding rising costs, and 40% worry about how inflation will impact their business.
The increasing cost of gas, goods, and rent are all reasons small businesses fear the worst from our current economy–and their place within that.
Of course, employees are also struggling, as wages have yet to meet the demands of gradually escalating living costs.
Since inflation affects society on both a macro and micro level, leaders must consider feasible ways to restructure their businesses, regardless of size, without cutting necessary resources.
For lasting success, employee retention must be at the strategic core, as it’s much easier to maintain a business with a strong workforce by your side.
Actionable Solutions for Surviving Inflation as a Small Business
In the face of rising costs, there are many ways to maintain your small business’s financial security without sacrificing your employees’ well-being.
Address Financial Insecurity
As you adapt your business to inflated prices, your employees will face the same challenges in their personal lives–and may need more income to keep up with higher lifestyle costs. The most apparent solution to address this need is a salary inflation adjustment. However, if it’s too much to increase your staff’s pay across the board, other ways exist to ease their financial burdens. Increasing PTO, offering childcare and gas stipends, providing profit-sharing options, or even allowing for hybrid or remote schedules can allow your employees to save money on transportation and other costs that make this time especially difficult. As long as you help where you can, your employees will feel grateful, and you will secure their loyalty and commitment.
Use AI Technology
AI technologies like robotic process automation (RPA), workflow, and intelligent document processing can save your employees time and energy on busy work while saving your company money.
In 2020, David’s Bridal debuted its Zoey messaging concierge service. This service trimmed their contact operating costs by 30% and moved 30% of phone traffic away from employees, allowing them to focus more on in-person customer interactions. Not only did the employees benefit from this AI, but the business did as well, demonstrating that new technology can be a lifesaver during and after inflation.
If additional labor is needed that AI cannot provide, but you cannot afford another full-time employee, consider hiring independent contractors. Many people enjoy the flexibility of freelance work and have valuable, specialized skills.
According to TAB, hiring independent contractors can lead to around 30% in savings. Your staff will be happy because other workers can take on the extra tasks that could cause burnout, and you will save money to put back into your business.
Apply To Grants
Small businesses can apply for many government programs, independently-funded grants, and local grants if needed. For instance, The U.S. Small Business Administration offers grants to women-owned and veteran-owned companies. There is also the GoFundMe Small Business Relief Fund and a $10,000 grant through Comcast RISE. During financially insecure times, it’s essential to see what opportunities are available to ensure your business’s health for years to come. For more information, try Grants.gov, your local library, or SCORE.org to see what can be available for you.
Nurture Local Partnerships
Another option is to collaborate with other small businesses in your community. Through local partnerships, you can trade services, offer vendor discounts, or co-host community events, generating leads for one another and creating a sustainable customer pipeline. People are inclined to support small businesses, especially in their own local communities, so connecting with other like-minded individuals is a surefire way of sustaining and expanding your business.
When dealing with inflation as a small business, you can still maintain a positive company culture. After all, once the dust of economic stress settles, you will be grateful to have a team committed to your business’s success and motivated to watch it grow.
If you would like to learn more about how small businesses can adapt to rising costs, check out this week’s episode of the Survive and Thrive Podcast.