Keeping a small business afloat in difficult economic times is exceptionally challenging. In 2021 alone, the annualized inflation in the US nearly surpassed 5%, a figure last seen over 30 years ago.
Unfortunately, there is no standard way or hack to ride this inevitable storm. Every small business is unique and carries its risks and rewards.
Such differences make copying another company's turnaround strategy to the latter unrealistic. But you can follow the general approach to ensure your business survives. Here are what you need to do to prepare for fluctuations in cash flow.
Business owners go for the most prominent and immediate problems with vigor and hesitation. It is understandable and makes good business sense in such situations. When things get tough, you may want to hold and hope that things will get better. It may feel suitable, but it could hinder making large-scale financial adjustments as you wait for stabilization.
From history, deflation rarely follows a period of high inflation. Since the 1940s, there have only been three years when annualized deflation occurred.
Instead of backing down, the plausible way to deal with inflation is to look at the bigger picture. It would help if you found what's working best and what may need changing.
Inflation presents a perfect opportunity to understand existing issues within your organization and further comprehend your business model. Effective assessment of your business operations will enable you to determine the strengths and weaknesses of your model and how these play in achieving your goals.
Thoroughly scrutinize your business operations, especially the employees' strengths and weaknesses. It gives you a top-down perspective essential for eliminating any chances of issues arising and adversely impacting future sales.
Inventory Your Staff
Payrolls, even during normalcy, are the most challenging aspect of a business, and inflation makes it even more complex. As a small business owner, it is best to spend your money wisely. Start by conducting a thorough review of your staff when there are issues and during the normal course of business. It ensures you put the right people on board, and they do their jobs effectively.
Ensure Access to Cash
Another critical step is to ensure your company has access to cash, particularly during disruptions. Visit a reliable bank loan officer to understand the requirements to get a loan to finance your business. It will solve your short-term cash-flow problems.
Having a great relationship with your banker is valuable for your small business. Small business owners may also get potential sources of capital, including tapping into savings, borrowing from family, or liquidating stock holdings.
Start Sweating the Small Stuff
As much as you focus on the bigger picture, don't overlook smaller things that can adversely impact your business. Minor issues such as inadequate parking space, a tree obstructing the public's view, lack of road access, and ineffective advertising can dent the business's bottom line.
Analyzing the various factors that attract customers to your business can also help you identify potential issues. Go through your quarterly expenses and look for the small items that may look innocent but are draining your accounts.
Don't Sacrifice Quality
As you handle costs, stay on the offensive and get your employees on board with any changes you are looking to make. You can do this without sacrificing quality when making product changes. Remember to cut costs while ensuring the quality of the finished products remains similar.
The Bottom Line
Inflation can put your business in jeopardy. Sometimes, a simple solution can keep your business running without disruptions. Be aware of the bigger picture and optimize your business priorities during hardship.
At Wilmar, we help small businesses manage their fleet effectively, even during disruptions. Get a free analysis today to get the solutions and services to keep your fleet rolling.