Entrepreneurs and small business owners are feeling the worst they have felt about the prospects for their businesses than we have seen in a generation. According to the National Federation of Independent Businesses, small business owners saying they expect better conditions for their businesses over the next six months have fallen to a net negative 61%. It is the lowest optimism score since the trade group began surveying small businesses in 1973.
With all this pessimism clouding the business outlook, what should a small business owner do? Nav experts have several ways to help you take control of the situation and come out stronger on the other side.
How to help your business cope with inflation
According to the report, more than a third of business owners said inflation is the biggest problem they face right now. No wonder, with monthly reports showing that inflation continues to rise at a staggering rate. The June 2022 report showed inflation at 8.8%, its highest level since 1981. Rising inflation means higher prices all around, which also means higher prices for your customers.
But there are ways to deal with inflation anxiety:
- Recognize what you can and cannot control. This goes for both your personal life and your business. Inflation is out of your control, but taking control of your business finances is not. Focusing on what you have the power to fix can help relieve anxiety throughout your work and personal life.
- Remember that this sharp rise in inflation will eventually come to an end. Inflation is an economic constant, but the type of inflation we are seeing now is temporary. The effects can be long lasting, but they will stop being so drastic at some point. “When?” is another question, but experts predict that by the end of 2023, the inflation we see now will slow down.
- Take control by cutting costs and keeping your head down. This is an option to meet inflation: reduce your overhead, reduce your expenses, save as much as you can, and invest in your business if you can. This can increase your cash flow and give you breathing room until the inflationary storm subsides while helping you build up a supply to weather other economic storms that may arise.
- Take the opportunity to grow to outpace inflation. This is another option to meet inflation – make more revenue to beat inflation (and your competitors). You can do this by investing in your business: increase your marketing spend to attract new customers, add new technologies to make your business more competitive, and improve productivity and production to increase sales.
Encourage workers to join your team
Another of the economic conditions causing anxiety right now is the workforce, particularly as it relates to finding and retaining workers. In fact, half of all companies are currently hiring and 94% said they could not find qualified workers to fill these positions.
The best way to entice employees to join your team is to make the job more attractive to you. Perks workers generally want now include better pay and benefits, but they’re also interested in part-time options, remote work and flexible hours.
But when there’s so much uncertainty, it’s hard for companies to want to expand what they offer future employees. Even when hiring as much as they can, only 3% of companies said they thought now was a good time to grow their business.
One way to increase your attractiveness to potential employees without spending on benefits or salary is to work on your internal company culture. By making your company a great place to work — and not just with employee discounts or snacks — you can increase referrals and word-of-mouth hiring among your existing employees. Work to provide meaningful opportunities for advancement and development as well as a true team spirit to make your employees want to stay (and their friends to come work for you too).
Protect your business against recession despite uncertainty
Uncertainty still hangs over the economy and small businesses are preparing for a recession. According to a Goldman Sachs report, 93% of companies believe the US economy will be in recession over the next six months.
There are now several ways to protect your business against the recession, and Nav recommends taking the following five steps to help your business survive the possible coming wave:
- Secure a flexible type of financing like a business credit card or line of credit to help pay for business expenses.
- Investing in growth through financing.
- Take advantage of current interest rates – they seem high now, but could get even worse as inflation continues.
- Improve cash flow by reducing payment terms or using invoice factoring.
- Consolidate your debts and refinance them for lower rates or monthly payments.
Sustain your small business for the long term
While optimism may be low right now, keeping pessimism at bay can help secure a brighter future for your small business. The fear of recession and the daily reminder of the cost of inflation can be hard to bear, but they can also present opportunities for growth.
Reinvesting in your business during a difficult time can make you come out on the other side even better than before.
Consider these ideas for the future:
- Improve your company’s cybersecurity and data management with new technologies and policies.
- Increase your marketing efforts to expand your customer base.
- Hone your customer service practices or develop special benefit programs to improve brand loyalty with existing customers.
- Create a productive and collaborative environment for your employees to improve retention rates and make your business more attractive to new hires.
Of course, all of these reinvestments will require cash, which you can either secure by cutting costs elsewhere or by seeking financing. Nav helps small businesses get the financing they need, whether it’s a business credit card, line of credit or small business loan. Using our specialist data analysis tools and other information, we find the right financing for you now – helping you prepare for the possible choppy waters ahead. Create a free account today to see your options.
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