5 Ways Small Business Owners in Colorado Can Survive Inflation
Inflation is on the rise, but there are a few advantages small business owners in Colorado can utilize to survive these difficult times.
More than 50% of American small business owners who responded to CNBC’s latest “Small Business Confidence” survey think the U.S. economy is in “poor” condition and say inflation is their top challenge. Time has proven that the Paycheck Protection Program (PPP) loans weren’t a cure-all for pandemic-related issues small business owners in Colorado are facing. The good news is there are a few things well-meaning business leaders in a bind can do now to improve customer relations and cope with higher federal reserve interest rates.
Think Like a Pilot — Get a Line of Credit Now
Would you rather fly with a pilot who stares at the controls or is constantly scanning the horizon for unexpected obstacles? The answer is obvious, yet many small business owners in Colorado lack a strategy for weathering economic shifts. The pandemic proved how important it is for small business owners to monitor their expenses, know which levers they can pull to generate cash flow and have a financial safety net independent of government aid. Vigilant scanning allows for earlier detection of challenges, while a line of credit can provide a short-term path for adjusting strategies. Small business owners who opened lines of credit before COVID-19 were able to absorb rising costs over time to help bridge the gap between when they paid their vendors and when they could pass the increased cost along to their customers. The best time to apply for a line of credit is when finances are stable. Once disaster strikes, it’ll be more difficult to get it approved or get help financing losses.
Know Which Levers to Pull to Generate More Cash Flow
- Increase gross profit (for example, by increasing your prices or reducing your cost of sales.)
- Improve accounts receivable collection (i.e., shorten your cash operating cycle) by shortening the payment terms you offer your customers or making a stronger effort to collect overdue balances
- Increase accounts payable turn rate by paying bills at the latest allowed time and renegotiating terms with your suppliers
- Invest your spare cash. If your cash flow has become stable and predictable, you can consider investing your excess cash. You can earn additional interest income as well as have the necessary cash to dip into during tough times.
Being candid with your customers is essential for relationship building. Small business owners in Colorado should be forthcoming about challenges they’re facing that impact the customer experience, share what steps they’re taking to address them, admit mistakes, encourage feedback and show gratitude for customers and staff at every opportunity. Customers want to know you’re making choices that align with their wants, needs, values and charitable interests.
Don’t Cut Corners With Culture and Talent Management
American small business owners have a reputation for paying minimum wage and expecting maximum commitment from staff. That doesn’t work in the era of “The Great Resignation,” even in Colorado where the minimum wage will increase 8.68% to $13.65 per hour in 2023. To attract and retain top talent, small business owners in Colorado need to cater to what today’s workers want — and it’s not just more cash. The pandemic increased demand for better health benefits, work-life balance, flexible schedules, empathetic leadership and respect. About 58% of U.S. workers polled for the Argyle-Leger Confidence Report cited respect as their top work-related work motivation.
Prove Your Product/Service Is Worth the Price
Small business owners generally want to provide quality goods and services at affordable prices but may not know how without hurting their profits. Some simply can’t for reasons beyond their control, like chronic supply chain disruptions. So, what can a small business owner do to calm a customer who balks at, say, a $20 sandwich? Show how increased prices come with increased value in the form of customer experience, customer satisfaction, customer service and community support. For instance, that $20 sandwich would be easier to swallow if customers knew it was made with high-quality ingredients sourced from ethical ranchers and farmers based in Colorado. Providing a unique experience and outstanding customer service is one of the few advantages small business owners in Colorado have over impersonal online competitors.
Keep Calm and Call Your Financial Partner
It’s a tough time for small business owners in Colorado. However, help and peace of mind can be found. We encourage you to bring your questions and concerns to a business banker who is uniquely equipped to debunk scary news reports with facts that enable small business owners in Colorado to make educated decisions.