If we thought 2020 was unpredictable, 2021 is dishing out it’s fair share of challenges for small business owners. In order to run a successful small business, you need product/services to sell, staff to sell it, and customers to buy it. That is ultimately the formula for magic. Due to unexpected obstacles, this formula for small businesses is at risk. However, we have some tools to help you overcome these setbacks.
Challenge #1: Supply Chain Issues: Consumers and business owners are all hearing and starting to see first hand the supply chain issues the nation is facing. Many stores are having trouble getting in product or supplies to support their business. For example, some restaurants aren’t having an issue getting food to serve, but are having issues getting to-go utensils, cups, and boxes. You may have seen some places putting your medium drink in a large cup because they simply can’t get the medium size cups in stock. With supply chain issues not expected to be resolved until the middle to end of 2022, it is important to be prepared and honest with your clients. There are a few things you can do to ease the burden if you face shortages due to supply chain issues.
- Communicate with Suppliers: Reach out to any suppliers you may have and check in to see if they are having issues keeping inventory in stock or receiving inventory. Many companies aren’t having an issue creating the product, but having it shipped to the facility for distribution. Being proactive to contact the supplier should hopefully give you time to make a game plan for any potential disruption.
- Research Alternative Suppliers: If in the event you are unable to get supplies from your vendor, having a backup vendor already picked out will help minimize any lapse of product/supplies.
- Work with Other Small Businesses: Just remember, being a small business owner is a community within your community of businesses. Business owners are all trying to accomplish the same goal of succeeding so it is important to support one another and help each other when possible. If you are experiencing shortages, then your fellow colleagues are too. Start a “need” train and see what everyone is short on. Perhaps a small business nearby has an abundance of the supply you desperately require but they are in need of something else. You can work together and trade goods as needed.
Challenge #2: Hiring and Retaining Staff: Staffing shortages is another huge impact we are seeing at all of the businesses nearby. Without being properly staffed, many businesses have had to make adjustments. Some employers are offering extra pay for working additional hours and other companies have had to shorten hours because they don’t have employees available to assist customers. However businesses chose to adjust for being short staffed, the result will impact the financial health of the company. Majority of businesses are hiring right now, so how can you hire and retain the staff you have? Here are a few tips:
- Be Competitive: Depending on your business will depend on compensation offered to its employees. To ensure employees want to work for you over someone else, offer competitive wages. Know your industry and know what your staff could make elsewhere. Make prospective employees a deal they can’t refuse.
- Offer Incentives: If you are in desperate need of hiring staff, consider offering a sign-on bonus or other new employee incentive. Perhaps you offer an allowance for uniforms or required shoes. On the other hand, you may have a great staff and want to avoid them leaving and having to replace them. If this is the case, consider offering incentives for working extra shifts, or maybe offer shift differentials for working the hours no one wants/is available to work. Entice and reward!
- If you are unsure about how offering incentives work for payroll or taxes, or if you are concerned if it is in the best interest for your company, your accountant can help you come to the best decision for you and your business.
- Keep Morale High: If staff feels involved, included, and heard, then morale will be extremely high. High morale=happy employees who don’t want/need to leave. Ways to offer involvement are to meet with your staff regularly for check-ins. See how your staff is feeling, encourage them to offer their feedback and opinions to make the business better. When staff offers good information or brings a valid concern to the table, address it! Ensure your team is heard. You can also offer holiday bonuses, team outings, or even something as simple as donuts in the break room to keep employees happy and engaged.
Challenge #3: Handling Inflation: Almost every business right now is increasing prices for services and products. This includes huge companies! Some major retailers no longer offer free shipping over a certain purchase amount, while streaming services are raising their monthly rates, and storefronts are marking up the price of their goods and services. Unfortunately, due to inflation, all prices and wages are going up. This means in order to continue to bring in revenue and make a profit, you need to consider raising your own prices. Being concerned about how this may impact consumers is valid, but here are a few things to help ease the transition:
- Be Upfront and Honest: Explain to customers the situation without beating around the bush. You can send a newsletter out to clients via email letting them know of the changes in advance so they aren’t caught off guard. You can also explain the why behind the price increase. Customers appreciate honesty, and many customers understand the predicament small businesses are in and chose to support them throughout hardships.
- Be Competitive: Know what your competition is charging. As they increase their prices, you have a good reference point to base your own prices on. As long as your prices remain competitive, consumers will continue to support your business.
Remember, your accountant can also offer bookkeeping services which will provide regular reporting on profits and income. Reviewing these reports and meeting with your accountant can help you come up with the best prices to stay profitable.
Although owning a small business may be causing a lot of stress due to the current business climate, know that you are not alone! Your community and business partners understand and support you. Remember when you need help to reach out to your fellow small business owners and also remember the My Accountant Bookkeeping and Tax Service team is available to provide financial guidance. Although 2021 has been unpredictable, these times will only make us stronger.