Entrepreneurs and small business owners are feeling the worst they’ve felt about the outlook for their businesses than we’ve seen in a generation. According to the National Federation of Independent Businesses, small business owners saying they expected better conditions for their companies over the next six months dropped to a net negative 61%. This is the lowest the optimism score has dropped since the trade group started polling small businesses in 1973. Now that the federal interest rate has been raised for the fourth time this year (and most likely not the last), it doesn’t seem like that optimism score will raise anytime soon.
With all this pessimism muddying the business outlook, what’s a small business owner to do? Nav’s experts have a few 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, over one-third of business owners have said that inflation is the biggest issue they’re facing right now. It’s no wonder, with monthly reports showing inflation continuing to increase at a staggering rate. The report for July 2022 had inflation at 9.1% — its highest level since 1981. Rising inflation means higher prices all around, which in turn means raising prices for your customers, too.
But there are ways to deal with the anxiety caused by inflation:
- Recognize what you can and can’t control. This goes for your personal life as well as your business. Inflation is out of your control, but taking control of your business finances isn’t. Focusing on what you have the power to fix can help relieve the anxiety throughout your business function and personal life.
- Remember that this sharp uptick in inflation will end eventually. Inflation is an economic constant, but the kind of inflation we’re seeing right now is temporary. The effects may be lasting, but it will stop being so drastic at some point. “When?” is another question, but experts are predicting by late 2023 the inflation we’re currently seeing will slow down.
- Take control by cutting costs and keeping your head down. This is one option in responding to inflation — lower your overhead costs, cut expenses, save as much as possible, and invest in your business if you can. This can increase your cash flow and give you breathing room until the inflation storm blows over while helping you build up a supply to weather other economic storms that may be coming.
- Take the opportunity to grow in order to outpace the inflation. This is another option in responding to inflation — make more revenue to beat inflation (and your competition). You can do this by investing in your business: increase your marketing spend to attract new customers, add new technology to make your business more competitive, and improve productivity and output to increase sales.
Enticing Workers to Join Your Team
Another of the economic conditions causing anxiety right now is labor, especially around finding and retaining workers. In fact, half of all businesses are hiring right now, and 94% reported that they can’t find qualified workers to fill those positions.
The best way to get employees to join your team is to make it more attractive to work for you. Benefits that workers generally want now include better pay and better benefits, but they’re also interested in part-time options, remote work, and flexible schedules.
But when there’s so much uncertainty, it’s hard for businesses to want to expand what they offer prospective employees. Even while they’re hiring as much as they can, only 3% of businesses said they thought now was a good time to expand their business.
One way to increase your attractiveness to potential employees without spending on benefits or pay is to work on your internal company culture. By making your business 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 on offering meaningful opportunities for advancement and development as well as real team-building to help your employees want to stay (and get their friends to come work for you, too).
Recession-Proofing Your Business Through Uncertainty
Uncertainty still looms for the economy, and small businesses are bracing for a recession. According to a report by Goldman Sachs, 93% of businesses believe that the U.S. economy will be in a recession in the next six months.
There are several ways to recession-proof your business now, and Nav recommends taking the following five steps to help your business survive the possible coming wave:
- Secure a type of flexible funding like a business credit card or line of credit to help pay for business expenses.
- Invest in growth through financing.
- Take advantage of current interest rates — they seem high now, but they may get even worse as inflation continues.
- Improve cash flow by lowering payment terms or using invoice factoring.
- Consolidate debt and refinance to get lower rates or monthly payments.
Future-Proofing Your Small Business Long-Term
While optimism may be low right now, keeping the pessimism at bay can help you secure a better future for your small business. The fear of recession and the daily reminder of the cost of inflation may be difficult to stomach, but they can also present opportunities for growth.
Reinvesting in your business during a rough period can bring you out the other side even better than before.
Consider these future-proofing ideas:
- Improving your company’s cybersecurity and data management through new technologies and policies.
- Increasing your marketing efforts to broaden your customer base.
- Perfecting your customer service practices or developing special benefit programs to improve existing customers’ brand loyalty.
- Creating 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 take money, which you can either secure by cutting costs elsewhere or by looking into financing. Nav helps small businesses get the financing that they need, whether it’s a business credit card, line of credit, or small business loan. Using our specialized data analysis tools and other information, we find the right financing for your needs right now — helping you prepare for the possible rough waters ahead. Sign up for a free account today to see your options.