You’re in the ring, fighting off rising fuel costs, supplier bottlenecks, import tariff hikes – so many enemies of your business. And just as you’re starting to get the upper hand as you fight inflation, just as you’re about to land a strategic blow, the lights go off.
As an SME, it can often feel like the world is trying to actively kill your business. According to a survey by NEXT Insurance, a third of small business owners are considering closing their businesses. As an SME, you’re the backbone of the economy, so it’s more important than ever to fight inflation. Here’s how you do it.
1. Don’t get pigeonholed
It’s time to learn the difference between a niche and a pigeonhole.
A niche is a gap in the market that you can use to carve out a bigger gap and expand. Think of a woodpecker. A woodpecker will listen and find a spot in the tree that’s weak because it’s full of insects. It then pecks at the wood until there’s a hole big enough to get to the food inside. It does this as many times as it needs to, and even expands them wide enough to use them as shelter and nests.
A pigeonhole, on the other hand, is just that – a hole full of pigeon. Sure, it’s great for the pigeon that there’s a gap that’s perfectly pigeon-sized, but there’s nowhere to grow. Nowhere to expand.
It’s like that with your business. Is the niche you’ve found giving you room to explore more markets? Reach new people? Find more customers? If not, it might be a pigeonhole and you might need to assess how to turn it back into a niche. For instance, at Job Crystal, our specialisation is recruitment, but we’ve diversified with a whole range of different services. We offer people-sourced and AI-sourced hiring. We have an awesome ATS system to offer our clients. Need quick background checks? We do that too. Want to know if your salary indexes are on par with the industry standard? We’ve got you covered.
Escape the pigeonhole by figuring out where you can adapt and grow.
2. Don’t get all your eggs from the same basket
As cliché as it sounds now, we’re living in uncertain times. Lockdowns, loadshedding, and skyrocketing fuel prices are creating an atmosphere where it’s tricky to plan. Companies are closing, supplies are drying up, bottlenecks are strangling industries.
That’s why you should diversify your supply chain. Are there better-priced alternatives? Can you source from multiple places? Is there a local supplier that will help you save on delivery or import costs? Having a wide range of well-researched suppliers can help prevent losses to your business.
3. Build a buffer to fight inflation
This one is tricky because chances are you’re already spending all you can to keep things going. It’s vital, however, that you have a backup fund. Did something happen to one of your suppliers, affecting your sales? The fund can cover it. Are fuel costs affecting the prices of your products or services? The fund can cover it. Has loadshedding made it necessary to invest in an inverter or generator? The fund can… you get it.
If you don’t have a backup fund, consider working a set amount of saving into your budget. If you don’t have that, consider if you can cut down on profits for a while to create it. Three months is a good buffer to aim for, but the more you have, the more peace of mind you’ll have if things go wrong.
4. Fight inflation by going digital
Rent is expensive. Utilities are expensive. One way to fight inflation is to assess where you can take your business online. Is your product something you could shift to an e-commerce space? Can you perform your services remotely? Moving things online helps save on overheads. You no longer have to pay for the space, water and electricity, stationery, consumables, printer rental, and internet. This creates more breathing room in your budget.
Sasha Knott, our CEO swears by remote work. Not only does it save on overheads, but your employees benefit through less commuting and the fuel savings that come with it. It also has the added benefit that if loadshedding hits, it’s not your entire workforce that gets affected. Not only are your employees taking shifts with when they’re offline, but you can organise that your employees share each other’s office so that they don’t have to miss work. Taking your business into the digital realm is a simple way to fight inflation.
5. Build internally and retain
As people look to get the edge on inflation by finding better work offers, you may find yourself with gaps in your workforce. And hiring is pricey. One way to save here is to make sure you’re training internally. Identify talent and potential in your workforce and offer opportunities to grow it. Have employees shadow each other. Create knowledge and skills sharing sessions. Develop workable SOPs. Fill the gaps before they appear.
Also make sure you’re doing everything you can to retain the talent you already have. Can you create opportunities for growth? Are you focusing on making sure their income is safe? Are you actively working to give them increases with rising living costs? Communicate your intentions, concerns, and strategies to your workforce. This will make sure everyone is on the same page and prevent frustrations that may lead to resignations.
6. Fight inflation by staying alert
You need to hone your ninja reflexes. The best way to beat inflation is to be one step ahead of it. Anyone who had to do SWOT analyses at school might roll their eyes, but they’re a great tool. By identifying your company’s strengths, weaknesses, opportunities, and threats, you can create a solid strategy for what to do if things go wrong.
Research what’s happening in your industry. Stay up to date with current affairs – not just locally but also internationally. The global market affects what happens nationally, so it’s important to know what’s going on. Identify problems that keep happening, and plan ways around them. For instance, loadshedding seems to be a fixture of life in South Africa, so figure out how you’re going to work around it. Inverters? Generators? Working offline for a few hours? Whatever it is, make sure that you know what your plan is long before it becomes an issue.
7. Make sure the price is right
You know what can make or break a company? Pricing. It’s not something you can neglect – not with the way the world keeps shifting. What might have been a good deal yesterday might be seen as a rip-off tomorrow. You need to make sure you’re always assessing your products and services to make your prices are competitive.
Are there areas where you can be saving on your manufacturing costs? Can changing your packaging help prevent price hikes? Are there areas you can automate? Is there something unnecessary in your product you can remove? Are there products or services that aren’t selling because there’s no demand? Is there a product or service you could make a loss on in order to cross-sell your other products and services?
Remember, cheaper is not necessarily always better. It might be tempting to reduce costs right down, but you have to understand your market. If you’re aiming for your average-joe shopper, cheaper costs are great. If your niche market is looking for a certain sense of luxury or prestige with your product, dropping the price might affect how it’s viewed. Know who your spenders are, where the money is, and how to best cater to their needs and expectations.
Inflation is a business killer, but it doesn’t always have to be. All it takes is creativity, the right tools, and a great battle plan to fight back. You know and love your business better than anyone, so make sure you’re giving it the best possible chance you can.