When prices are on the rise, consumers struggle under the strain, but inflation hits businesses just as hard. Buyers may complain about rising prices, but the companies they buy from are likely facing significant challenges of their own.
If you own your own business, you are no doubt concerned about the impact of rising prices. In inflationary times, there are difficult choices to be made. Should your business raise its prices and risk alienating its customers? Should you eat the cost personally, reducing your standard of living in the process? Should you hold the line and hope for the best? Neither of these options are perfect, and none will solve the problem on their own. If you want to survive and even thrive in inflationary times, here are some coping strategies you can use.
1. Reduce Operating Hours
Keeping a physical storefront or office open can be a costly endeavor, especially when energy rates and other costs are on the rise. If you want to maintain your physical presence while still saving money, you might consider reducing your operating hours.
If you have not already done so, conducting a study of foot traffic and sales on an hour-per-hour and day-by-day basis can be a smart thing to do. Once you see the pattern in those sales, you can work to adjust your operating hours in a way that produces maximum profit with minimal disruption to your customers.
2. Seek Out New Suppliers
When inflation is on the rise and you do not want to pass those higher costs onto customers, seeking out new suppliers could be one way to cope. While your suppliers are likely struggling with rising prices of their own, not all will react in the same way. Seeking out lower-cost suppliers can help you trim costs and cope with the ravages of inflation.
If you do plan to seek out new suppliers, read those contract terms carefully. It will not do you any good to lock in a temporary low price, only to be hit with higher costs a few months down the line.
3. Reconfigure Packages
If you have been to the grocery store lately, you may have noticed the shrinking packages. There is even a name for this phenomenon, where prices stay the same but the number of ounces goes down. That term is shrinkflation, and if you are not able to lower your costs, you may be forced to follow suit. Redesigning packages is one way to hide that shrinkflation from your customers — it may be a bit sneaky but sometimes it’s justified.
4. Lower Headcount
Laying off employees is never an easy thing to do, but sometimes it’s the only way to save money. If your business is on the brink and you are struggling under the weight of inflationary pressures, reducing payroll may literally be the only way to cope.
The choice between cutting costs and raising prices is a hard one, but in the end, the needs of your customers come first. Businesses that are able to hold the line on their pricing are likely to gain market share both during the inflationary period and when that period is over.
Dealing with rising prices is not easy for consumers, but it can be even harder for the businesses they buy from. If you own a business, you understand those challenges all too well, but you do not have to buckle under the strain. The strategies listed above can help you weather the inflationary storm and come out stronger when the storm clouds finally clear.