Rising costs, wage increases, and regulatory changes can all impact your business, but there are ways to navigate these waters and maintain a successful business.
Determine Your Expenses
To build your business preparedness, analyze the existing financial condition of your company by calculating your revenues and profits along with your expenses. This process will help you determine your cash flow and understand how to structure your costs, such as wages, supplies, rent, and other expenses. An accountant can be helpful in this regard; it also helps to gain bookkeeping skills or have a trusted bookkeeper to ensure that you are accurately recording your financial transactions, including purchases, sales, receipts, and payments.
Understand your inventory
To remain competitive, small businesses constantly have to find new ways to offer high-quality goods at a price point that is affordable to their customers. It helps to have a strong point-of-sale (POS) system or other reliable method to track your inventory, so you have a good sense of how much product you have and how often you need to order your products and supplies so that you can minimize your waste. If your financial assessment shows that the current cost of your supplies is too high to be profitable, consider exploring other vendors or work with your current vendor to renegotiate your agreement.
You can also use your point-of-sale or inventory system to understand what is selling well and what isn’t selling well and adjust your business model accordingly. Talking with your peers and customers, staying up to date on current trends, and attending trade shows are all good ways to understand if there are new products or services that you can offer to your customers that will help to grow your business, or if there are current products that you offer that are no longer relevant or popular. Having the ability to anticipate and adapt to the changing needs of your customer is a great way to make your business stronger.
Assess your prices
After you’ve determined your expenses, you’ll need to make sure that you can continue to turn a profit to stay in business. If your prices are not covering your costs, you may try to identify ways to reduce your supply and operational costs, or you may consider raising your prices. You’ll want to research what other businesses are charging for similar goods and services so that you remain competitive, or consider ways that you can change or rebrand your business and products or services to support a price increase.
Identify operational efficiencies
In addition to supplies and prices, you can also look at your business operations to find ways to decrease your costs. For instance, if you find yourself driving to the post office several times a day to mail packages, you might try different methods to bundle your deliveries or see if there are services that can do the deliveries for you to reduce your driving time and mailing costs. Or if you have very labor intensive or manual processes, you may consider new software or technology that can automate some of those tasks, freeing up time that can be put towards other parts of your business. Review all aspects of your operations and think creatively about whether there are ways to increase your business’ efficiency and productivity. If needed, a business process consultant may be able to find ways to decrease your operational costs.
Key Dates and Deadlines
- License expires – December 31
- Renewal deadline – February 15
- Payment deadline – April 1