How your business can survive rising costs and an impending recession

Prices rise (8.6%, To be precise). This is not news. We see it at the supermarket, car dealership and especially at the pump.

But thanks to a mix of slowing business growth and rising labor costs, we’re starting to see something new. Companies like Tesla, Netflix, Wells Fargo and Carvana face freezes and layoffs. Banks and economists have started sound the alarm about an impending recession.

If you are a business owner who went through the last recession 15 years ago, you may be experiencing unwanted flashbacks. And if your business wasn’t there then, the fear of the unknown can set in.

Amid rising inflation and a looming recession, you may be wondering what you can do to prepare for and weather the storm. And if I’ve learned anything from the Great Recession, it’s this: Don’t use the economy as an excuse to let business problems go unchecked.

Yes, an economic downturn is no joke. It can easily make the smartest entrepreneur feel out of control. But it’s no time to be wary of the things that to be under your control.

4 tips to survive rising costs

If you have been personally affected by inflation in your business, raise your hand. hear that? That’s the sound of hundreds of thousands of entrepreneurs across the country raising their hands in the air.

In reality, a small business survey found that 74% is due to increases in delivery costs and 45% to rising labor costs. So no, you’re not alone.

Collectively we have had to deal with inflation, the large layoffs and the resulting rising labor costs. But now we’re starting to see some new things take root:

• Mass layoffs of some pretty big names
• A shift in consumer spending from goods to services
• The basis for a possible recession

So now that we may be heading into a recession, it may be time to rethink things as we know them. Here are some tips for surviving rising costs (with or without a recession).

1. Cut unnecessary costs

How many times have you bought something and immediately thought Well, I didn’t need that. If you’re like most of the human population, it’s probably happened once or twice (a year? Month? Week? Day?).

The same goes for your business. Maybe you bought something that you just don’t need. Heck, you might even have ongoing expenses (e.g. expensive accounting software) that you don’t need. So take a good look at your expenses and make some changes (e.g accounting software).

You can cut back on expenses such as:

• Operation costs
• Utilities
• Subscriptions
• memberships
• To advertise

Consider evaluating other suppliers to see if anyone can get you a better deal. Or you can try negotiating with your current suppliers to find better deals.

And I know you’re probably thinking: But Mike, how can I cut costs when labor costs are so high? And that’s a great question that brings me to my next point…

2. Get creative with employee benefits

You may not be able to afford widespread wage increases that keep pace with the year-on-year inflation of 8.6% or the 5.9% cost of living adjustment. You may even need to reserve increases for the best of the best during periods of high inflation and economic downturn.

But right now we are still dealing with the big layoff. So, how can you keep your talent happy if you don’t have the money to raise money? Two words: Be creative.

If you don’t already, there are a number of raise alternatives you can offer, such as:

• More paid leave
• Opportunities to work from home
• Flexible schedules
• Profit Sharing Programs
• Better health benefits
• Retirement Plans
• Business discounts or free stuff
• Enhanced Growth Opportunities

And here’s the bonus for employers: some of these types of pay rise alternatives can also benefit your bottom line. For example, you may be eligible for a 401(k) tax credits to start a new subscription and/or add an auto-enrollment feature to a subscription.

By getting creative with employee benefits, you can keep your team happy and help your company navigate this era of rising costs.

3. Think of new ways to boost sales

Heard the news about Target? If you haven’t, retailer reduced prices in stock because it was too much. The reason for this is that consumers seem to be moving away from purchasing just goods and returning to services (e.g., travel).

Do you notice a declining trend in sales? It may be time to look at new ways to boost sales. For example, you can decide to:

• Change your marketing efforts
• Offer discounts
• Release a new product or service
• Adjust your prices
• Upsell and cross-sell to customers

4. Analyze your business

You can’t improve something you don’t understand, right? Absolute. In 2008, one of my startups, Career Marketplace, was struggling to survive. I originally used the Great Recession as an excuse instead of analyzing exactly what was going on. But then I decided to dive in and see what was really going on.

So, here’s what I did to analyze my startup and do what I could to fix bad business practices during the economic downturn. I sat right behind the office manager for a month and learned the ins and outs of business processes. I analyzed everything. In doing so, I learned that there were quite a few layoffs and inefficiencies that dragged us down.

If you’re like I was then, it’s easy to blame the economy for business problems. Unfortunately, the economy is not to blame for everything.

Here are a few questions to ask yourself when analyzing your business:

• What is my marketing return on investment (ROI)?
• Are there any manual tasks we can streamline, such as bookkeeping or? payroll?
• Do I have unnecessary expenses that I can reduce? (Hint: Tip #1!)
• Are our customers satisfied with our products or services?

Talk to your employees and customers to analyze your business. Collect feedback from employees (after all, they’re the ones in the trenches) and ask customers for reviews. Also view your accounting reports (eg profit and loss statements, balance sheets, etc.) and budget.

Analyzing a business can be time consuming, stressful and sometimes daunting. But once you take the time to really understand things that could drag you down there to be under your control, you can start making informed decisions. And trust me, your company will thank you for it.