6 Simple Tips for Small Businesses Coping with Rising Costs
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Let's face it—running a growing business comes at a considerable expense. And as your small business continues to adapt and grow, you'll likely notice many of your costs expanding, too.
Finding ways to reduce or eliminate some of these costs can make a huge difference in the success and sustainability of your small business. To get you started, here are six helpful tips for coping with the rising costs of running a small business.
One: Know How Much You're Spending
Sure, it sounds like a no-brainer, but it's easy to overlook many of the smaller, less frequent costs of running a small business. And these little costs can add up to surprisingly big numbers. If you don't have a dedicated accountant, then the responsibility of keeping track of all these miscellaneous outgoing costs falls on you.
As your small business evolves, you may discover that certain costs are no longer essential to your success. Set aside time to look at your outgoing costs and ask: Are these still necessary? Does the end justify the means?
You can find areas to cut back on by using this technique to track your finances.
Two: Eliminate Unnecessary Costs
We all have experienced that moment when you buy something and discover just days or weeks later that you don't need it. The same is true for small businesses.
Maybe you bought a piece of equipment that's no longer useful to your operation—or wasn't necessary in the first place. Instead of letting it gather dust, think about selling it to another local business to recoup some of that cost.
Or maybe you have ongoing expenses that no longer serve your small business? These include subscription services, various memberships, and operational or utility costs. If you decide you can't cut something out completely, consider working with other vendors or providers to see if you can get a better deal—or ask existing ones if they're amenable to a discount.
Three: Benchmark Your Suppliers
It's probably been a while since you last benchmarked your suppliers, hasn't it? Reviewing and evaluating your suppliers is critical to getting the best deals for your small business.
Your vendor prices will change over time, and it's up to you to keep an eye on these costs many businesses assume are fixed. At the same time, look at the playing field and see which other vendors can provide you with the services you need at a better price.
Four: Offer Alternative Employee Benefits
When the costs of running your small business start to rise, it may be difficult (or even impossible) to provide employee benefits in the form of raises or bonuses. But there are other ways to compensate your employees in a high-cost environment.
Consider offering more paid time off if your employees are salaried. If your business model is compatible, you could make working from home an option to help your employees maintain a healthy work-life balance.
Other creative options include flexible schedules, profit sharing, career growth opportunities, and business discounts.
Five: Raise Your Prices
Many small business owners worry about passing increasing costs on to their customers. The level of competition, threat of bad press, or fear of losing business are all understandable worries—but running a small business isn't worth it if rising costs keep you from making money on your goods and services.
Moreover, the increases don't have to be significant or permanent to make a difference—a slight or temporary increase may be all it takes to offset the rising costs of running your business.
Six: Find Ways to Drive Your Sales
Improving your sales is one of the best ways to fight against rising costs. While your first thought might be to increase your marketing and advertising budget, this expenditure may be difficult to make when prices rise.
Instead of investing more money into marketing, consider changing your marketing strategy by targeting different areas with different techniques.
Alternatively, you can drive sales by releasing new products, announcing new services, or upselling and cross-selling your existing goods. If you have stock that's been challenging to move, consider offering a discount to excite and engage existing and new customers.
Coping With Rising Costs Isn't Easy
Dealing with the high costs of running a business is not for the squeamish, but you can handle it. Instead of letting rising costs get the better of you, think creatively about what adjustments you can make to stay successful. Start today with these six tips for small businesses coping with rising costs.