Four ways small business owners can combat inflation

June 15, 2022

Inflation is hitting small business owners at an all-time high. It affects the ability of small businesses to provide their products and services to their customers. It also affects the power of these same customers to purchase them.

Combating Inflation is a daunting task for any small business owner. However, each must take steps to do so and ensure their small business continues to operate effectively.

To reduce the effects of Inflation, small business owners will have to think outside the box to develop ways to increase their revenue and decrease overall costs.

Here are four ways small business owners can combat Inflation:

1. Consider saving advertising costs by focusing on social media

Small business owners can reduce costs during this high inflation period by converting most of their advertising to social media. Small business owners can utilize social media to advertise their businesses at minimal to no cost. If they look to reduce their advertising costs, they can focus on posting organically on their businesses’ pages and community groups. An organic post is posted directly on a company’s profile and group at no charge.

Advertising almost exclusively on social media is a simple way for small business owners to reduce costs while reaching existing and potential customers. If small business owners are still willing or able to contribute some money to their advertising, they can utilize organic posts in conjunction with paid posts. Paid posts are promoted to reach more users. Therefore, these paid posts have the potential to reach not only current customers but also prospective ones, while organic posts will only gain the followers the business’ page currently has.

2. Create new products utilizing existing supplies

Small business owners can also increase their revenue at minimal cost by creating new product or service offerings that use supplies they already consistently purchase.

Therefore, small business owners must harness their creativity to develop new products or services they can offer that utilize their existing inventory. A pizzeria, for example, could begin selling strombolis, using the dough, cheese, and toppings they already purchase for their pizzas. Without buying additional inventory, pizzeria owners can create new revenue streams.

Small business owners should strive to think outside the box. Developing new products and services will allow them to earn extra revenue without spending an abundance on supplies. However, small business owners should not hesitate to brainstorm products or services that require one or two new supplies. The earnings these new offerings bring in will likely offset the cost of any new supplies needed to produce them.

3. Utilize third-party service providers and freelancers

Outsourcing is another easy way for small business owners to save money during this period of Inflation. Many third-party service providers offer services at a lesser cost to the owner than hiring an employee to perform specific tasks.

Utilizing third-party services can allow businesses to devote that money to more pressing matters. A restaurant owner, for example, could outsource their delivery option to a third-party source, such as DoorDash or UberEats. Utilizing a third party for this service could eliminate the restaurant owner’s gas and maintenance expenses for their fleet of delivery vehicles. Furthermore, small business owners can also outsource tasks to freelancers, such as making social media graphics. They will likely be able to negotiate with the freelancers to do this work at a cost that would free their employees up to do other, more profitable tasks.

Outsourcing payroll alleviates a stressful task for many small business owners and administrative professionals. It is an excellent way to save time and resources allocated to other functions of running a small business.

The internet is full of opportunities to find talented individuals to complete many jobs. They will likely work for a lower hourly rate than a more established professional in their respective field. Also, small business owners may consider hiring college students or providing internships to keep labor costs low. Hiring an intern can introduce new talent and bring fresh ideas to a small business.

Therefore, small business owners have the potential to save a multitude of money by employing third-party service providers, freelancers, and interns.

4. Temporarily eliminate high-cost-of-production products and services

Small business owners can decrease their expensive production costs by temporarily removing the product or service it costs them the most to produce. Taking a break from offering this product or service will allow a small business owner to save extra money. Business owners can then redirect customers to purchase products with better profit margins.

While customers may initially be disappointed at this brief unavailability, small business owners must express that the absence of these products and services is only temporary. They may want to state that it is a way to deal with Inflation. When small business owners are open and honest with their customers, they feel appreciated and more connected to their small business. They are more likely to continue doing business with them in the future. While briefly eliminating products and services may initially seem scary to small business owners, it can save them money when they need it most.

While there is no easy fix for Inflation, small business owners can make these changes to increase their revenue while decreasing expenses. Though doing so may not provide complete relief from the effects of Inflation, it will help small business owners acquire and save much-needed extra money during these unpredictable times.

PaySmart is a payroll provider located in Mechanicsburg, Pennsylvania, supporting small businesses in the Central PA region. PaySmart is dedicated to helping small businesses take care of their payroll needs. To learn more about how PaySmart may provide payroll solutions, please get in touch with us at 717-766-1777. O r New Client Concierge is waiting for you!