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4 Financial Tips for Navigating Inflation, Supply Chain Issues, and Slowing Economic Growth Don't let unforeseen circumstances leave your business in a bad place. Here are a few helpful reminders to keep your company on the right course.
Let's face it: Life as a small-business owner is far from easy right now. It's never easy, per se, but between soaring inflation, supply chain confusion, and an overall sluggish economy, many factors are lining up making life for an entrepreneur even more challenging than usual. According to a recent survey, a whopping 93 percent of small-business owners say they are worried that the U.S. economy will experience a recession in the next year.1
While bigger corporate brands may have the resources to help navigate these challenging times, small-business owners are doing their best with a limited toolkit. Here are four tips small-business owners can put to practice right now to help them adapt to the current economic situation and plan for continued uncertainty.
1. Stock up on supplies sooner rather than later.
Inflation in the U.S. accelerated to 9.1 percent in June of 2022, the highest since November of 19812. That means the price of things like fuel/energy, food, and common household items are higher now than they've been for decades.
While you may be tempted to purchase office supplies in bulk now before the price of goods increases even more (and that wouldn't be a bad idea), business owners may also consider stocking up on warehouse items and renegotiating terms with suppliers when possible. Planning to have supply on hand guards your business against dramatic price increases as well as shortages due to unexpected supply chain issues. This may require thinking creatively about ordering when your usual supplies are unavailable.
2. Examine and reduce expenses.
Whether you're a brick-and-mortar or an e-commerce business, you're likely used to a predictable amount of expenses vs. revenues every month, or year (accounting for seasonality). But when your expenses skyrocket, they eat into your profits and that's the last thing any business owner wants.
Doing a periodic deep dive on expenses can help your business run leaner, setting it up for more predictable success despite unpredictable outside circumstances. This involves examining all levels of expenses—from employee salaries to office rent to supply costs and more—and cutting back wherever possible. This could mean reducing office space, automating repetitive processes, renegotiating terms of a lease or contracts, or even reducing your workforce, if necessary.
3. Rethink your prices.
If you've done all you can to reduce expenses, the next potential step would be to increase your prices. According to the survey, 85 percent of small-business owners said they've had to increase prices of their goods and services to offset higher expenses brought on by the broad impact of inflation and supply chain issues. Just over half (53 percent) said they raised prices by less than 10 percent.1
At this point, your customers may expect a price hike, but raising prices by too much may have them running to a competitor. Start low and experiment with different products or services. See what sticks and how it impacts your profits.
4. Consider a business loan.
It takes money to make money—and to stay afloat during uncertain times. If your business lacks liquidity, you lose the ability to keep up with cash flow to keep your business chugging along and expenditures that are necessary to help your business grow.
That's where a business loan or a line of credit can be extremely helpful. You'll need to consider things like what you'd spend the money on, whether you want a short-term or long-term loan, how you'll repay the money, and more. Making sure your business has the money it needs before you run out can be the difference maker in your business' success.
Learn more about how U.S. Bank can help your business get the funds and resources it needs to survive and thrive during uncertain times.
1 Small Business Challenges Worsen Amid Record Inflation and Workforce Shortages, Goldman Sachs
