Let's look at six ways to protect your small business from inflation and ensure it remains profitable.
Inflation continues to skyrocket, and from May 2021 to May 2022, the Consumer Price Index(CPI) rose 8.6%. That's the most significant increase the United States has experienced since 1981. But it's not just the U.S. dealing with rising inflation — 60% of advanced economies are also dealing with it.
For many small business owners, raising their prices is the natural reaction to inflation. And while this strategy may be necessary in some cases, it can also cause you to lose customers, especially if you do it too quickly. Let's look at six ways to protect your business from inflation and ensure it remains profitable.
Related: 4 Ways Startups Can Beat Inflation
1. Reduce expensesOne of the easiest ways for small businesses to deal with inflation is by cutting their expensesas much as possible. In particular, take a look at your monthly service contracts to see if there's anything you can do without.
For instance, are you paying for a co-working space you no longer use? If so, you can probably cut that expense. Of course, there will be necessary subscriptions that you can't afford to let go of. For those contracts, you can either negotiate the price with the vendor or see if you can find a less expensive alternative.
2. Prioritize cash flowCash flow is always crucial for small businesses, and a lack of cash is the number one reason most businesses fail. Consistent cash flow helps your business run more smoothly by allowing you to pay your vendors and invest in new opportunities.
And yet, cash flow is an area many businesses struggle with. To improve cash flow, look for ways to encourage your clients to pay your business faster. You'll want to be flexible, of course, because they're also feeling the crunch of inflation.
You might also consider offering discounts to customers who pay their invoices early. And for larger products or services, you could start requesting an upfront deposit.
Related: Here's How Small Businesses Can Survive the Post-Pandemic Economy
3. Lower your supply chain riskYour company's supply chain can be negatively impacted when prices go up. One survey found that nearly half of small businesses have been affected by supply chain issues.
Companies that provide in-person services to customers are most at risk, like contractors. However, businesses are worried about supply chain issues leading to financial uncertainty across all industries.
Here are some of the biggest issues you may run into:
4. Automate what you canAnother way to deal with inflation is by leveraging technology to automate as many repetitive tasks and processes as possible. Leveraging technology doesn't have to be complicated — there are numerous apps available to help you manage things like bookkeeping, customer management and marketing.
By leveraging technology, you can accomplish more in your business while spending less, freeing up your and your employees' time to focus on higher-level problems.
5. Focus on employee retentionYou're not the only one feeling the effects of inflation. Your employees are feeling it, too, as they pay more for everyday items. But as inflation rises, your employees may also expect their salaries to rise.
A Payscale survey found that 44% of companies are losing employees due to pay. Your employees will likely expect you to match — if not exceed — the cost of inflation.
If you can't afford an across-the-board pay increase, there are other ways you can help ease the financial burden of your employees. For instance, letting employees work remotely could cut down on commuting costs. You could also offer stipends for things like child care, tuition or home insurance.
It's crucial to talk to your employees about their expectations regarding pay proactively. Ask how inflation is impacting their lives and what kind of salary range or benefits package would improve things.
Related: 4 Smart Business Strategies for Dealing With Inflation
6. Consider opening a line of creditIf you want your business to continue to grow and stay innovative, you will have to continue to invest in your business, and one of the best ways to do this while still preserving cash flow is by taking out a small business line of credit.
A line of credit can help your business meet its working capital needs, offer payroll increases to your employees and invest in your company's future. The benefit of taking out a line of credit is that you can draw money as you need it and only repay what you actually spend, allowing you to stay one step ahead of the latest challenge.
As you can see from the tips listed above, raising your prices is not the only way to protect your small business from inflation. These methods will not only give your small business more security against inflation, they can also ensure that it remains profitable.
By Joseph Camberato August 11, 2022
Opinions expressed by Entrepreneur contributors are their own.
Spend time every day learning something new.
Opinions expressed by Entrepreneur contributors are their own.
To be successful in business, you need a nimble mind to react to problems faster and you need to be adept at understanding whatever is thrown your way. In short, your ability to succeed is often determined by how smart you are.
With practice, anyone can increase their knowledge base, sharpen their intellect and learn new skills. There are a number of ways to boost your cognitive skills and expand your mental capacity. We should aim to spend time every day learning something new. The more we learn and the more deeply we understand, the better we can improve our brain performance and increase our capacity to learn.
The list below includes the best ways to engage your mind and grow your intelligence so you can meet the ever-mounting challenges you face. By following these seven tips, you can become a little smarter every week.
1. Spend time reading every day. The mind is like a muscle: the more you use it the stronger it will become. Reading is an important element for developing your mind, as it’s one of the basic ways we gain knowledge and learn.
Through reading, you can discover new things and educate yourself on any topic. Reading also helps develop your creative side by engaging your imagination. Words, both spoken and written, are the building blocks of our social existence -- and through words, you can go anywhere in the world.
If you’re looking to quickly grow your knowledge, one easy way is to speed up your reading so you can charge through books, written material and even online articles (like this one!). Most people read at an average rate of 250 words per minute. At that rate, it would take you about six minutes to read this article. But with speed reading, you could cut that time in half. Just remember, the goal is to help you rapidly consume more information, not just zoom past words without fully comprehending their meaning.
Related: Learn to Speed Read and Retain More Information
2. Focus on building a deeper understanding.Becoming smarter takes more than just absorbing information -- true wisdom comes from deeply understanding a subject. The most successful people consistently outpace everyone else because they’re able to quickly learn new skills, adapt to changes and work both collaboratively and independently.
They use a deep and meaningful knowledge of their world and a flexible mindset to understand problems and quickly come up with solutions. Their deep knowledge base gives them the foundation they need to perform.
Work to steadily build a deep and meaningful knowledge base on a few key topics and issues. Be honest with yourself about areas you are weak in and seek to reinforce your understanding of important subjects until you have a rock-solid foundation that you can build on. Knowledge is cumulative, so start with the basics. You need to have a firm grasp of how something works before you can fix it. It’s good to have a breadth of knowledge, but it’s also important to take “deep dives” to truly understand difficult and complex issues.
3. Constantly question and seek clarification.Asking questions is the single most important factor in becoming smarter. Innovation always begins by asking questions and being curious. There is value in asking questions because it’s the way we push the boundaries of our world and our mind. That’s why it’s so important to hone a curious, open mind by constantly questioning everything.
It’s not just a matter of asking questions; you should be asking insightful questions that probe the validity of assumptions, analyze logic and explore the unknown. Practice asking questions that get to the heart of a matter and cultivate a willingness to push for answers.
Like anything else, developing this skill takes time. As you’re working, reading or engaging in activities, keep a running log of questions that come to mind about anything and everything that you’re involved with. Don’t be afraid to seek clarification when something isn’t clear.
Related: 3 Questions 'Always On' Entrepreneurs Need to Ask Themselves
4. Diversify your day.One of the best ways to increase your intelligence involves flexing different areas of your brain. You aren’t going to get any smarter by doing the same ol’, same ol’ every day. While having a routine is a good thing (so your body knows when to get up and when it’s bedtime), you don’t want to spend your waking hours stuck in a rut.
By inviting a little novelty into your daily life, you keep things fresh and interesting. That might mean checking out a new place for lunch, or going for a midday stroll on which you pay attention to the sights and sounds around you. You can also mix things up during working hours by simply finding new ways of doing your everyday tasks.
If you’ve been working for a while on one thing, try switching to something else. Look for ways to do things slightly differently. This will fend off boredom and help your mind stay sharp and focused. By mixing things up, you’ll use parts of your brain a little differently each day. This helps you increase your intelligence by forcing you to flex your brainpower in different ways -- think of this as an overall workout for your brain.
5. Review learned information.We recall new information most crisply right after we’ve learned it. If you don’t use that information again soon after you’ve learned it, it will quickly fade from your mind. After a few days, we may only be able to recall a little of what we initially learned. In order to increase our ability to remember, we need to store this information in our long-term memory, and the best way to do this is to frequently review what we’ve learned until it’s locked in our memory banks.
Make notes while reading or researching something, or take a few minutes when you’re done and write down the main points. Then spend even a few minutes every day reviewing this material. It takes a little effort, but once it’s a habit you’ll be amazed at how well a quick review of the information will help confirm that you understand it -- and help you see what areas you need to focus on.
You can also try rewriting the information or reorganizing your notes -- this will actively reinforce what you’ve learned. The act of rewriting notes helps us clarify our understanding of a topic and reduces the time it takes us to “relearn” it when we need to use that knowledge in the future.
Related: Unless You Track Your Progress, Setting Goals Is a Waste of Effort
6. Keep track of your ideas.As you work to build your knowledge base, you’ll find your mind expanding and growing in new ways. If you’re filling your brain with great information, your mind is going to do its thing and start interpreting that information in a useful way. You may find that you’ve suddenly become an idea machine. You’ll start experiencing “aha moments” -- those little breakthroughs where you suddenly connect one idea to another to form an even bigger and better idea.
Make sure you’re taking note of these ideas. Write them down, keep them handy and make sure you continue to refer back to them. Remember, even your biggest and best ideas are utterly useless unless you actually do something with them. If you have a stroke of genius but lose your train of thought and never go back to build on that idea or refine it -- well, then you’ve just missed a great opportunity!
Not all of your new ideas are going to be winners. Some may be fleeting or simply won’t pan out. But once in a while, you might have a lightbulb moment that could change your life.
7. Allow yourself to change.Whether we realize it or not, sometimes we hold ourselves back. There are times when even the smartest people allow themselves to become bound to obsolete or erroneous ideas and ways of thinking. To become truly intelligent, you must allow yourself to make mistakes, to take risks and leap at opportunity and learn from all these experiences.
You must allow yourself to change, to be open to new things and to ultimately become a different, better version of yourself. By opening yourself up to new sources of knowledge and pushing your mind to learn new things, you may ultimately question some of your old, foundational thinking. You may find that some of your perceptions were off, or that your viewpoints weren’t grounded in fact.
Challenge ideas, discuss them with others, hear out other sides and flex your analytical skills. But be open to changing your mind. And above all, give yourself room to grow and continue on your path to seeking wisdom. As you become smarter, success will follow.
By Deep Patel & entrepreneur.com February 13, 2019 Updated: November 8, 2020
In 2014, my world flipped upside down. One month after moving from San Francisco to New York, my partner Kayla and I found out we were expecting our first child. Like so many first-time parents, I felt unprepared. I felt that my life had just stepped on a perpetual treadmill and ratcheted up the speed and incline by 2x. We weren't settled in a home, nor did I feel financially prepared to bring another human into the world. But I wanted to take a massive swing to try and improve the trajectory of our lives — and I needed it to happen in nine months!
So, I decided to go "all in." I was going to quit my job, lock myself in my room with my laptop and build a master plan that would make our family wealthy beyond our years. After a week in isolation, writing my resignation notice and crafting a handful of half-baked ideas, I had it figured out!
This. is. impossible. We needed health insurance. We needed a salary to cover our basic living expenses. And we needed one another for emotional support. So, I needed to change my perspective on what "going all in" really looked like to build the business and life that would get us there. Going all in would be a process, not a single moment in time. This is what that process looked like for my family and me.
Is Going 'All-In' On Your New Startup Going to Cost You Your Family and Relationships?
Don't quit your day job When I started Disco, Kayla didn't have the best maternity plan from her employer at the time. We needed my day job to cover our basic living expenses and our health insurance, as well as to ensure that we didn't blow through ALL our savings to support an extended unpaid leave period for Kayla and our daughter, Laura.
In terms of how I split my time, I spent two hours every morning connecting with Laura before my day job started. I spent two hours in the evenings with my family to ensure we were able to connect at the end of the day. From the hours of 7:00 p.m. until 1:00 a.m., my co-founders and I worked together on the business, seven days a week. That left us five and a half to six hours of sleep before my daughter would wake up. We did this for almost eight months before we had a product in the market with real paying customers.
We didn't come from generational wealth. Knowing that it'd take at least five years to build a meaningful business, we had to be smart about how we allocated funds to get the business rolling while supporting our family. It wasn't until we were officially accepted into 500 Startups with that traction that I officially resigned from my day job. If you have adult responsibilities, keep your day job to handle those responsibilities, and use your evenings to build your rocket ship.
When Is the Best Time to Make the Leap From Your Day Job to Entrepreneur?
Go broad to go narrowWhen we first started our company, I found myself looking for silver bullet solutions and the path of least resistance. The reality is that in the earliest stages of building your company, you may have early product usage and early revenues, but you might not know if you truly have product-market fit. When I pitched Marc Benioff my startup in 2014, I knew we had early signals in a big problem space, but I wasn't entirely sure that we had true product-market fit and ultimately came up empty-handed.
To find the idea worth going "all in" on, we needed to go broader to test a wide range of potential product concepts, quickly and inexpensively. We used tools like Webflow and Invision to mock-up product concepts to socialize with prospective customers before building anything. Once we had strong customer validation, we could go narrow to refine the product concepts that showed the most promise, and then apply engineering effort to those concepts. We'd have to repeat this process several times over the course of the six years we spent building Disco as we focused on true product-market fit.
How Much Time Should You Devote to Starting Your Business?
Do things that aren't your startupThe first months of Disco were intense without much sleep or personal time; However, after we were accepted into 500 Startups, and I was able to transition out of my day job, I was able to regain some personal time to re-invest in myself.
Initially, I struggled with guilt, believing that I needed to fill that time with my startup but found that my productivity suffered greatly. The data in our CRM validated how I was feeling. I was generating 15% more leads — however, my customer close rate dropped by 20% when I spent more time working on the business.
So, I began to incorporate a few things into my weekly routine:
By Justin Vandehey & entrepreneur.com August 17, 2022