How business owners like you are managing inflation
Rising costs are everywhere – in fact, an NFIB survey cites inflation concerns as the biggest problem small business owners face. Unfortunately, it’s nothing new. Economists have been discussing record-setting inflation for most of the year. The US Bureau of Labor Statistics reports that the Consumer Price Index increased 9.1% over the last year.
It’s definitely daunting for small businesses. How you handle inflation can make or break your bottom line. But don’t fret. We’ve asked small business owners across varying industries what they’re doing to keep up with high inflation and boost their cash flow. Let’s take a look at what entrepreneurs just like you are saying:
As you can see, each small business owner has specific needs when it comes to turning obstacles like supply chain issues, the ever-growing cost of goods and varying shortages into an opportunity to serve their customers better. So come with us as we dive a little deeper into their advice.
Get down to the brass tacks with customers…and vendors
The key here is transparency. Put yourself in the customer’s shoes. Wouldn’t you like to know why small business owners are raising prices? It’s crucial in this post-pandemic world to keep up with inflationary pressures without alienating your customers. By clearly communicating changes to business conditions with customers, they’ll get the chance to see the value and benefits of your product or service and trust the prices are reflected appropriately.
You can also start at the source – it’s a great way to shore up your labor and supply expenses.
“We talk to our vendors – see what they can do to help.”
- Emily Mitchell, Angel Concept
Take stock of your raw materials, packaging, labor costs and more to find your footing and make a case for negotiations with vendors. Equipped with your expertise, experience and helpful data like your sell-through rate, you can reach out to vendors and collaborate on ways to reduce prices in a way that benefits you both.
Sometimes less is more
Julie took another approach – buying in bulk to save on the initial price of goods, but also changing up some of her company’s packaging to reduce higher prices when it comes to material and labor costs.
Opting for more sustainable processes can also make a huge difference in alleviating higher costs. Something as simple as switching from plastic bags printed with your logo to more generic, eco-friendly paper bags can take a chunk out of your upfront costs.
Besides, your customers care more about what’s in the bag than the bag itself and may even feel better themselves when it comes time to discard said bag. Want to learn more about sustainability? Get started with our guide to getting more impact out of going green.
Make your product or service the star of the show
Are your goods or services worth spending more to buy? It all boils down to how customers perceive them. Tareka’s tip to grab customers’ attention revolves around strategically organizing your digital and physical storefronts.
Put your product knowledge and sales data to use by prioritizing best sellers. Moving those most-loved products to the forefront and showcasing them creatively is a low-to-no-cost way to increase sales.
Be sure to spell out the value of your offerings in your packaging, marketing efforts, promotions and product descriptions. If you offer things that are rare or difficult to procure, or that will replace or outlast other products, don’t be quiet about it. Make an effort to communicate value whenever possible.
Pop-ups and collabs and special editions, oh my!
Have you considered striking up collaborative partnerships with other brands or influencers? Jacquline says it’s a great way to make a standard product or service feel more memorable to her customers. Plus, it’s another way to get a larger conversation started about your business through social media.
49% of consumers depend on influencer recommendations according to the Digital Marketing Institute
Likewise, initiatives like a one-time-only pop-up event or branding a product as a special edition also create a sense of urgency.
Going the extra mile can help show customers that you care about them and make them more likely to spend regardless of higher prices. First time setting up an event? Let our retailers guide to a profitable event get you started.
The bottom line
It all comes down to three things: service, value and trust.
“We find customers can live [with price increases] as long as they’re getting the level of customer service they expect.”
- Dave Hardy, Nordic Knives
By tackling the impact of inflation head-on, small business owners and entrepreneurs alike can get the profit margins they need while keeping customers on the best of terms.
For more tips and resources on how to grow your business, check out the Heartland blog or subscribe to The Entrepreneur’s Studio.
Heartland is the point of sale, payments and payroll solution of choice for entrepreneurs that need human-centered technology to sell more, keep customers coming back and spend less time in the back office. Nearly 1,000,000 businesses trust us to guide them through market changes and technology challenges, so they can stay competitive and focus on building remarkable businesses instead of managing the daily grind. Learn more at heartland.us