A small business owner’s tips for tackling rising inflation
“You should strongly consider matching your team’s salaries with inflation every quarter, without the need for government or union intervention,” writes small business owner Avi Efrat.
The highest underlying inflation rate since the introduction of the GST is an opportunity for small businesses to forge ahead with new innovations and opportunities.
As someone who has run my own business since 2007, I have seen the highs and the lows — the global financial crisis made a massive impact, as has the pandemic.
Experts suggest what we are going through is because of the invasion of Ukraine and China’s lockdowns in Shenzhen and Shanghai putting a pause on shipping, rather than massive injections of cash into the economy.
In other words, this too shall pass — eventually.
While times have been tough, you should strongly consider matching your team’s salaries with inflation every quarter, without the need for government or union intervention.
Or, if this is not possible, find ways to compensate such as providing bonuses and incentives that cover mammoth petrol price and rent increases outlined by recent data.
At my business, Fantastic Framing, staff have access to work cars with maintenance costs covered they can use to travel between home and the office.
What owners can do to reduce overheads elsewhere is spend more time on long-term planning rather than just-in-time inventory.
While we prefer to source our timber locally, its cost has increased by 6% recently — this has forced us to build new relationships with suppliers in Indonesia, who can ensure we don’t have to pass on these costs to customers.
Containers from overseas may take longer to arrive, but it provides the business with a level of certainty that has not been readily apparent in recent times.
But we are not completely immune from price rises as our 15 delivery vans run on expensive diesel. Before the federal budget’s petrol levy discount, our petrol bill went up by $3000 a month.
If you do need to pass on costs to your customers, the key is to communicate clearly and transparently why this is the case.
Not every customer will be on board, but the loyal customers you have developed over time through previous marketing retention efforts will show they are with you for the long haul. We have certainly found this to be the case.
This continues to be a tough time for many, but being proactive in supporting your staff will be an investment with a tenfold dividend.
