Inflation in Business: How to Cope as a Franchise Owner
How to Reduce Inflation in Business: Survive Inflation with these Tips!
Inflation is an economic situation that materializes when the price of goods and services rises over a sustained period. Consequently, the purchasing power of a country’s currency is reduced.
What happens during inflation? Businesses typically raise prices, accept lesser margins, or reduce production costs to combat inflation, and these days, better solutions allow businesses to explore more complex strategic responses to inflation.
Inflation is only one of the many obstacles that business owners face, along with the pandemic and staff management challenges. However, every franchise owner should be prepared to face these issues and should predict the possible outcomes in order to come up with a solution that will keep their franchise profitable.
Today, we’ll examine four solutions available to you as a franchise owner to survive inflation while retaining as many customers as possible.
How to deal with inflation in a business
The first step to dealing with inflation is to forecast what might happen. You might risk making the wrong prediction but not predicting anything at all is worse.
One thing to keep in mind is that inflation is different in 2022. Franchises today have market visibility and agility that their forefathers could only dream of even a generation ago. They have better data and more sophisticated tools for analyzing and turning it into valuable information for decision-making.
Taking the time to predict the consequences of inflation and weigh your options is the perfect strategy to keep you prepared for inflation as a franchise owner.
Below, we’ll discuss how to fight inflation as a business and some proactive solutions to adopt as a franchise owner.
4 Steps to beat Inflation in your business:
1- Consider Applying for a business loan
As a franchise owner, you should consider applying for a business loan only if you’re looking for more capital to keep up with customer demand. According to the Small Business Index report, almost 45% of business owners have taken out a loan in the past year to deal with inflation.
The advantage of going this route is that if inflation persists, there’s a high chance you will be paying the money you owe with cheaper cash.
Use your loan to buy an investment property or towards projects that will take your business to the next level such as investing in new equipment and technology, polishing your marketing strategy to attract new customers or even hiring new staff.
2- Raise your prices
According to the Uschamber.com, to cope with the impacts of rising inflation, small business owners are having to adjust. The vast majority (67%) report having to raise their prices to cope with inflation.
In order to retain your customers, you should be strategic about the way you raise prices for your business and you should do so slowly and incrementally and in areas where your clients are less likely to notice.
3- Improve productivity
Contrary to what you might be thinking, you don’t have to let go of your staff. Instead, focus on increasing your team productivity in order to increase your franchise revenue. You can implement the use of certain apps to track productivity and monitor tasks.
Make sure that as a franchise owner you stay involved with the day-to-day operations and that you encourage your staff in order to increase the positivity and productivity in your workplace. Eventually, it will reflect on your sales and revenue.
4- Reduce your expenses
If the pandemic taught us anything, it’s that the hybrid work model provides the efficiency and flexibility every business needs. This consists of offering in-office and remote work opportunities for your staff. By doing that, you would be taking a proactive step towards reducing company expenses such as rent, mileage reimbursement, utility bills, etc.
Another way to reduce your expenses is to look into products that you’re not using and either cancel those orders or reduce their numbers to make the best use of your resources and money.
Being a business owner comes with many challenges. It is difficult as is to run a franchise and manage staff, but when obstacles like the pandemic or inflation disrupt your business, it is crucial to take the necessary steps to cope with the challenges and keep your business from failing.
There are many steps you can take as a franchise owner to face inflation in business. Forecasting and predicting outcomes is a good place to start. Remember that your staff is here to support you and that investing in your employees rather than letting them go will prove to be beneficial for you and your company.
Take the necessary time to evaluate and assess the options you have for your business and then decide on the best solution and strategy to put in place for your franchise.
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