Everyone is feeling the effects of inflation. For small businesses this means a dip in customers and cutting back on inventory (among much more). Read on for tips on how to prepare for the long run of high inflation.
Improve Cash Flow
According to Forbes, small business have two options: commit to staying small or commit to growth. Both of these tactics are different ways to manage your business until inflation returns to a more normal range.
If you plan on maintaining the status quo, the goal is to save money and improve your cash flow. There are a variety of ways to do this including cutting all nonessentials and finding ways to minimize production costs. Another way is to focus marketing efforts on your current customer base.
After you save money you have to invest it wisely. Your investments should be outpacing or, at the least, keeping up with rising inflation.
Commit to Growth
The second option is committing to growth. The goal of this tactic is to generate enough revenue to stay ahead of inflation. There are several ways to stay ahead including evaluating your pricing strategy, increasing marketing, and investing in your own business.
Of course, there are several ways to invest in your business. One way is through investing in technology to improve productivity. Another is through applying for a small business loan or taking out a line of credit. The Federal Reserve expects six more interest rate hikes in 2022, so the sooner you take a loan out the better.
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Are you wondering if it’s time to grow your business? Check out these six signs to see if expansion is the best option for you.
- You’re bored. Do the days feel like you’re stuck in a rut? Maybe it’s time for a challenge, and one challenge that will get you off the hamster wheel is seeing if expanding is the best option for you.
- You’re overworked. You gotta make money to spend money, and if you’re doing work that could be delegated to someone else, think about hiring someone part time. With that extra time you could find more ways to make money.
- You’re in high demand. Do you have to schedule orders weeks in advance? Are you having to turn customers away because you’re out of stock? This is a tell-tale sign to find ways to partner to make sure everyone leaves your store happy.
- You’re profitable. If you’re making a profit in the hundreds (or even thousands) consistently, you are ready to expand. If your profits aren’t trending, then wait a while until they do. Read this article from Forbes to find out more.
- You have opportunities. Has someone contacted you for a larger than usual order? Are people wanting to partner? Jump on that opportunity before it goes away (after all you never know when it will come again).
- You have ideas. The best entrepreneurs act on market trends. Do your research first, but if you’re sure something is going to take off find a way to make a profit off it.
Expanding is exciting and can open doors for your business you never imagined. If you’ve been thinking about it, maybe it’s time to take the next step.
This article was inspired by The Small Business blog.
If you’re looking for more information to guide you in owning a retail business, subscribe to American Quilt Retailer today. Already a subscriber? No worries—join our Facebook group for insights and dialogue from industry specialists like you.