In addition to the Great Resignation, the hyper-competitive labor market and the rising cost of doing business were some of the factors that affected small business owners in the country last year. According to a report released by the NFIB, inflation is also causing concern for America’s entrepreneurs.
Despite the various factors that affected small business owners last year, they still faced the highest inflation rate in 40 years. One of the most effective ways to counter rising inflation is to pass the higher costs of doing business to your customers. Many businesses have already done this, and consumers are already aware of this.
The NFIB report noted that the average selling prices of small business owners increased by four points last year. This was the highest reading in the organization’s history. According to the Philadelphia Inquirer, instead of implementing a widespread price hike, small business owners should focus on increasing the prices of products that are most likely to be profitable.
Big brands are known to hide the rising costs of doing business by quietly raising the prices of their products on the spot. This practice, known as shrinkflation, involves leaving the price tag unchanged.
Despite being price-sensitive, consumers are still not always aware of the subtle changes that are happening in the packaging of their products. According to Quartz, if they had read the fine print, they would have noticed the changes that were happening in 2021.
Small business owners are investing in technology and automation in order to increase their employee’s value, cut down on costs, and improve their operations to counter the effects of inflation.
Despite the high costs that are affecting small business owners, investing in automation and tech has proven to be very effective during times of crisis. According to a study conducted by HBR, businesses that invested in automation and AI during the pandemic were able to weather the storm better than those that didn’t.
One of the most effective ways to beat inflation is to stock up on low-cost items. According to American Express, this strategy can help small business owners avoid increasing their prices. Although prices are currently high, the latest report from the Consumer Price Index showed that inflation is still on the rise.
If the current rate of inflation continues to improve, then the high prices that are currently in the market will eventually feel like they are low by next year.
Although debt is a part of running a business, it can become blurred when the prices of goods and services are high.
If your business is eligible, then you can take advantage of a Section 7(a) loan from the Small Business Association. This type of loan can allow you to refinance your existing debt or increase your working capital.
Although inflation is now the main concern of small business owners, the labor crisis is far from over. According to a survey conducted by the Small Business Association, the two issues are deeply intertwined.
The Great Resignation is still not over, and your ability to keep your employees happy and motivated will determine how you can survive the current high-inflation environment