Between supply chain problems, labor shortages, fuel costs and inflation at record highs, costs for business owners have been steadily on the rise.
According to some economic experts a typical yearly jump in inflation in the U.S. is two percent, yet prices are rising about five percent annually as inflation continues to disrupt the economy. While labor concerns may lessen this year, supply chain matters are another story, say logistic professionals who predict delivery problems could continue into 2023.
This perfect storm of economic conditions is wreaking havoc for many businesses who must contend with these challenges and continue to operate and maintain good customer relations. To help ease some of the strain, here are some strategies to consider:
1. Raise prices – With consumers desperate to find everything from appliances and cars to cosmetics, food and clothing, some businesses are in the driver’s seat when it comes to pricing. With little competition right now from other retailers who might offer the same products for less, businesses can set prices accordingly and be sure the customers will keep coming.
2. Flexible pricing – Airlines use dynamic pricing, charging a different price based on when a ticket is sold. Technology like QR codes allows small businesses to use adjust their pricing easily, based on supply and demand and competitors. Employing a tool like this allows you to fine tune or experiment with pricing structures with just a few keystrokes.
3. Business as usual – This may not be the best time to expand your business according to some financial advisors. With the price of raw materials and other goods and products still soaring, you’re likely to encounter significantly higher costs for your expansion than you may have planned for before the global pandemic.
4. Cut back on marketing – As you look for ways to cut costs without negatively impacting your clients, you might want to scale down your marketing budget. Maybe your inventory is lower than usual or you don’t have adequate staff to meet your existing demand. Rather than spending to attract new customers you can’t handle, consider saving some money on marketing, just for the time being.
Fluctuations in the economy are affecting every business, and business owners need to navigate more wisely than ever. You know your business better than anyone. Are your customers more quality or price sensitive? Are you minimizing and consolidating expenses when possible? At Diamond & Associates, we can help you make sense of the numbers and we are experts at helping you save money on your taxes. Contact us today to schedule a call or meeting to discuss strategies to keep your business going strong during these challenging economic times.