Tuesday, 30th August 2022 | Accounting,Management
How small business owners can protect themselves against rising inflation
Inflation is on everyone’s mind, including small business owners. Just as everyday Canadians are feeling the pinch of rising costs, SMBs have to figure out how to protect their businesses while continuing to service their customer base–all while navigating the challenges of the COVID-19 pandemic. Read on to learn more about how you can turn inflation-related financial pressure into growth.
How small business owners can protect themselves against rising inflation
Inflation describes an increase in the cost of consumer goods and services. It’s a simple concept with complex causes but it’s certain that the COVID-19 pandemic has played a significant role in the spiking costs faced by Canadians. In January 2022, the inflation rate was a little over 5% compared to the previous year for consumers, with many businesses experiencing even higher increases. For Canada’s SMBs, this means rising prices and tighter profit margins.
If your business has yet to suffer the effects of inflation, it’s likely only a matter of time. Although costs don’t always rise at the notable levels we’ve seen this past year, inflation is an ongoing process so your best bet is to be proactive.
Inflation management strategies for your small business
Focus on growth
In dealing with rising prices and shrinking profit margins, small businesses will have to choose between severe austerity or a growth mindset. In the former strategy, you cut all but the absolutely essential expenses and try to hang on until things improve. (Spoiler: inflation is continuous.) The problem with this strategy is that you won’t be in a position to invest in your business so the likelihood of it surviving is painfully low.
Rather than trying to wait things out, focus instead on growth. Review your profit margins regularly and no less frequently than quarterly to make sure you can adjust to maintain your cash flow. This will help you maintain some certainty even while the markets fluctuate. By moving forward with a plan, you may well be giving yourself a better chance at success in both the short- and longer-term.
Review your gross profit margins
Setting your prices to match inflation rates is inefficient and can alienate your customers. Instead of posting fluctuating prices, build some room for adjustment into your everyday rates so you can be nimble in the face of instability without blowing your margins.
Look for savings
A growth mindset doesn’t preempt smart financial decision-making. Look at your indirect costs to see if there are places you can cut unnecessary expenses. Review your overhead expenses, software and media subscriptions, administration costs, and other operational items. Consider automation where you can. It streamlines processes, reduces errors, and can save you time and money.
Be smart about borrowing
Borrowing can be a sound choice, provided it's done at the right time and the right terms. If you foresee running up against cash flow issues, don’t hesitate. Borrow the money you need to keep operating. There are online tools to help you predict trends so aim to borrow at favourable rates. You can select a fixed rate loan to protect your repayment terms. Similarly, consider moving high-interest credit card debt to loans with lower rates.
Current inflation rates are a concern for Canadian small business owners but there are strategies to maintain operations. The tips above will not only help you weather this storm, but will also help you prepare for the next.
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Marketing ideas for your business in the new year
As the end of the year approaches, it’s time to revisit your marketing strategy to meet current consumer expectations. Forecasting trends is tricky, but what’s clear is that in 2023, customers value privacy, inclusivity, transparency, and overall authenticity, and it’s your job to show them how your business practices meet these ideals. Read on for six steps you take right now to market your business in 2023.
Understand your changing audience
The first thing you need to do is revisit your market. Review your sales and marketing data to make sure you have a realistic grasp on the size, demographics, and character of your target market. Pay close attention to any changes in your ideal customer and use this updated intel to seek out new opportunities. For example, if your business has grown or taken a new direction in recent years, it might be attracting a new audience. Make sure you’re communicating with the most appropriate market segment.
Update your website
Your website is one of your most valuable marketing assets so it’s crucial that it be in good shape. Review your site to make sure all the content is correct and up-to-date. Check to make sure that it loads quickly and displays correctly across desktop, tablet, and mobile platforms. You probably look at your site regularly so consider getting someone with “fresh eyes” to take a look. Ensure that your site works intuitively and offers a seamless customer experience. A site that’s pleasant to use will help you convert new visitors and retain returning ones.
Maximize the potential of social media
With more than 4.7 billion people using social media, your business cannot afford to ignore it. If you’re just starting out on social platforms, now is the time to claim your presence. Set up accounts for your business on top platforms like Instagram, Facebook, and TikTok. Investigate which sites your ideal customers might be using and ensure you’re on them too. Post relevant content, regularly, and make sure that you keep your profiles fresh and current. Try running contests or promotions to boost engagement, and take advantage of the built-in shopping capabilities available on many platforms. You can communicate a lot about your brand values by aligning yourself with other local small businesses through collaborations or sponsorships.
Leverage video content and live streaming
Video content has been a rising trend for the past several years, and is well-suited to businesses who want to increase awareness, improve lead generation and sales, and reduce support calls. Consider how video content might work for your business, keeping in mind that consumers appreciate being entertained. Live streaming is popular and an effective way to connect with your audience in real time. Engage your audience with quality storytelling. Inform them with a clear and concise script. Be creative.
Get interactive with your audience
When was the last time you did an online quiz or game? How about worked with an online calculator or map? Interactive content is engaging, which is why audiences–and marketers–love it. It’s low-cost and can help you increase brand loyalty, generate leads, and drive sales. Think about ways your business can use interactive content to grab your customers’ attention.
Respect consumer privacy
More than ever, consumers are concerned about privacy. Demonstrate respect for your customers’ privacy by compliance with standards like GDPR, by properly acquiring and using user data, and by continually informing your customers of exactly how you’re handling their information.
If you want to stay ahead of your competitors in 2023, now is the time to fine-tune your marketing efforts to communicate your business’ authentic brand and values. Take an inclusive, transparent, privacy-first approach, to reach your target audience.
Marketing