Many small business owners have had a lot thrown at them over the past few years. But despite rising inflation, supply chain issues, and other pandemic-era economic uncertainties, the Small Business Index hit its highest score in recent years at 66.8.
Today, small business owners are weighing the struggles of current inflation and worker shortages against recession pressures likely to hit over the next few months.
So what are some of the tactics small businesses can implement to continue growing their business’s health?
Creating A Healthy Business Plan in An Unhealthy Economy
Possibly the toughest thing many of these businesses are facing is that despite seeing their businesses stabilize, nearly 70% of small business owners still stated a drop in the quality of their local economies. That’s why many current successful small business owners have been revisiting their business plans.
Whether they’ve downsized, taken on more work themselves, or better targeted their demographics to decrease overhead, these creative adjustments are contributing greatly to the success of small businesses. Here are a few items you can consider adjusting in your business plan:
Narrow your Target Market
Get precise on who you’re targeting and what you will do for them, and make sure your ads and outreach focus on that market
Add Revenue Streams
How can you leverage your expertise and materials to keep revenue coming in when times get tough? Can you add a membership or subscription program? Introduce a related product line? Can you make a digital version of your product or service, or vice versa?
Connect with Your Existing Clients
Make sure you’re in touch with your best clients and get their feedback on how you can meet their needs as the economy changes. Remember, it’s cheaper to keep a good client than to get a new one, and happy customers send you their friends.
Plan on Selling Your Business
Building your company into something a larger business will purchase is a viable strategy. Plan your one, three, or five-year strategy for building your company into a gem for future buyers.
New Work Environments
Another major issue facing most small businesses has been the ongoing hiring shortage. As mentioned above, many owners have seen themselves taking on more tasks and hats than in previous years to combat their lack of manpower. For some small businesses willing to compromise, hybrid work situations have been a promising solution, making their hiring process more competitive and alluring to potential employees. If you have to much to do and not enough people to do them, see if these strategies will help you:
Let employees work from home or on a hybrid schedule
You’ll keep employees happier, and may find a higher productivity rate. This is also a good way to decrease your overhead—if fewer employees are in the office, you can move into a smaller (cheaper) space.
Contract non-critical work
You and your employees should be focused on meeting the needs of your clients, and being the best (insert company type here) you can be. Things like accounting, HR, marketing, IT, and other common business aspects can be outsourced to the experts for less than most small companies spend on the labor to keep them in-house.
Cut Business Lines that Don’t Make Sense
Yes, I know I said to consider adding revenue streams above. But this is also a good time to evaluate existing products and see if they’re pulling their weight. If you have services that take a lot of time and don’t have much to show for it, consider cutting the cord and investing yourself and your staff back into things that really matter.
Use Financing to Fight Inflation
Experts recommend that a small business keep enough cash on hand to cover up to six months of expenses. While this fund can help keep a company afloat through a rough patch, what can a business do if they don’t have such a hefty emergency fund?
For small businesses finding themselves short on cash flow, securing reliable local financing can help keep you on your feet. A business line of credit can be used as needed to pay for supplies, cover unexpected costs, and keep you running. An SBA-backed loan could be enough to get your business in a position to grow through the recession, instead of shrinking.
But if you need to secure financing, it’s a good idea to start seeking it now. Rates are increasing, and many lenders limit or stop offering certain business loans altogether in a tight economy. If you’d like to talk about financing options for your small business, contact us.