The US inflation appears to go into a winter lull as it cools down to 7.7%. Yet projections remain bleak. What’s more, the Fed sticks to its plans, recently delivering another 75 basis-point interest rate increment. So economic volatility remains high and alarming.
With another looming recession, worries and uncertainties surround the SME sector. A survey shows many small businesses expect closure due to these drastic changes. Indeed, it’s hard to put up and maneuver a business in a stormy market environment. Entrepreneurs must be extra careful to withstand the blows and rebound.
Fortunately, you can make prudent decisions in a high-inflation landscape. In this article, we will provide you with some tips to fortify your business.
Digitize and Automate
When the pandemic struck, businesses had to find ways to stay afloat. It was when digital transformation accelerated and changed the market landscape. Business strategies adapted to the trend as more entrepreneurs and customers went online.
The most typical manifestation of digital transformation is the evolution of digital marketing. Marketing strategies have shifted from commercial ads on television and magazines to the internet.
Digital transformation can also be utilized in other ways. Technology can help you improve operational efficiency. For instance, you can use employee monitoring software to maintain labor productivity. It’s a vital tool today as remote or hybrid work setups continue.
Also, you can use technology to manage supply chains and inventory levels. So, you can save time and money since it speeds up the process without hiring more people.
Moreover, technology can help you trace back all your financial transactions. You don’t have to worry about coming to your office and seeing piles of invoices to sort. Online payments are now accessible. They’re error-free since they generate electronic invoices. Even better, it’s convenient for customers who prefer to pay using digital wallets and virtual credit cards (VCCs). Note that cash transactions in many countries have plummeted in the last two years. And while we’re at it, you may start accepting cryptocurrencies as payments.
Take Care of Your Staff
It takes work to improve retention today. The Great Resignation cost businesses a lot as the pandemic took its toll. And until now, it has yet to be resolved as employees continue to jump ships. Worse, employee poaching has become more prevalent in the US. Statistics show that 74% of businesses suffered from employee poaching in 2021. So to limit employee turnover, you must be attentive to their needs.
You can start by making their compensation package competitive or within the industry standards. If you implement a return-to-office (RTO), make them feel safe and important. For instance, you can provide risk allowances or encourage them to get vaccinated without discrimination. But if possible, let them work from home or whatever setup the majority prefer. A survey shows that more than 80% of American employees favor a remote work setup.
Even if you cannot provide a raise, you can do many things to make them stay. Lending an ear for their concerns, complaints, and suggestions can make them feel valued. Creating a vibrant ambiance in the office can also help. You can reserve a space where employees can relax or chit-chat while taking short breaks.
Increase Your Market Appeal
As more businesses enter the market, you must establish a strong market positioning. But before launching your marketing ads, observe the market landscape first. Social media marketing may be the latest trend, but that alone may only sometimes work. So, you must know your target market and the best channel to engage them. Observe the demographics to determine the websites and places they frequent.
To make your products and services more appealing, you must know the prevailing prices. Doing so will help you in this high-inflation environment. Find the optimal prices that can compete with your peers and adjust to market changes without hurting your finances.
Keep An Eye On Your Finances And Taxes
Amidst macroeconomic pressures, you must ensure solid and intact fundamentals. You may start by reviewing your previous performance. Is your business efficient? Which among your business segments generates the highest revenues and incurs the most costs?
Finding the answers to these questions can help you adjust your production level. You can also determine if you’re paying the proper taxes to avoid more expenses. But note that tax filings also vary with the business type or structure. Click here to learn more about it.
You must also evaluate your financial positioning using the Balance Sheet. Check your cash level relative to your total assets and borrowings. Keeping borrowings low is a must as interest rate hikes intensify. Also, check the quality of your assets to dispose of the non-performing ones. Doing so may improve asset management.
Fortify Your Customer Base
Although capital and labor force is the lifeblood of your business, nothing is to offer if no one will purchase. Your customers serve as the end receiver of your products and services. Customers can dictate your performance, so you must reach out to them.
Make them feel valued by hearing out their feedback. You can do so using qualitative surveys and product validation. For a more comprehensive approach, you can get in touch with them to conduct Quarterly Business Reviews (QBRs). It highlights the product value, goals, and areas for improvement.
Providing loyalty perks, such as discounts and promos, can boost engagement. You may also excite them in other ways. For instance, you can issue stickers to be stamped for every purchase. They must complete the blank spaces to get the prizes or perks.
Putting up a business in a high-inflation environment can be risky. It can cost you a lot of time and money that may lead to bankruptcy if handled poorly. Yet, there are opportunities you can get with your prudent management. You can stay afloat and even expand when the US market rebounds.