4 The Mainline From Executive VP Rex Storm Executive Vice President [email protected] Rising Inflation Impacts Small Business In this inflationary economic setting, a small business must routinely adjust prices and terms upward, to avoid becoming awash in rising costs and debt. Tips For Your Business to Combat Inflation As inflation continues to rise, so does the cost of goods and services produced, and so rises their price. Your business has been affected by inflation—and you’re not alone. Fifty-two percent of small business owners say inflation is their top challenge, according to the MetLife-U.S. Chamber of Commerce, Small Business Index for Q1 2024. Conquering the impact of inflation can be daunting, but the good news is you have options. There are ongoing steps you can take to sustain your business and improve your bottom line. Here are seven inflation combatting strategies to consider: 1. Monitor your business and study the markets Closely monitor and document your expenses, markets, production, and competition. This means studying and gathering the data valuable to inform your best decisionmaking about profitable spending, negotiation, and agreement. Monitoring production and labor costs can identify areas to cut, add, improve, or reduce debt. Armed with good information about current markets and rates, you can negotiate better pricing with customers and suppliers. Take time to get advice from other experts, such as an accountant, consultant, business advisor, vendor, customer, colleague, lender, or attorney. During uncertain financial times, it’s helpful to have external support to prepare your business for the future. 2. Diversify and strengthen your supply chains By sourcing from multiple suppliers and having multiple customers, your business can reduce reliance on a single supplier or customer who may quickly become unworkable in some unexpected way. More customer/vendor options in your portfolio can mitigate the impact of supply chain change or disruption. 3. Raise your business’s prices Increasing your prices is one effective way to maintain cash flow and stay profitable when inflation is high. Put resources into areas that grow profitability. With strategic pricing, by constantly analyzing market trends and pacing your competitors, you can create pricing that stays competitive and protects your bottom line. According to the NFIB Small Business Index, February Report, 37% of small businesses have recently increased their prices. 4. Work on employee retention Without strong employee retention efforts, you can lose valuable workers— and struggle to meet customer demand. Across Oregon and the U.S., employees are quitting at record-high rates in search of better working conditions and compensation elsewhere. The NFIB Small Business Optimism Index Report in February stated that labor quality remains the single most important problem for business. The failure of employee compensation to pace consumer inflation has accelerated worker turnover. Human resource
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