You are in good company if you feel like you have constantly been adjusting your business plan since 2020. Many New Jersey small business owners have struggled to adapt their businesses to the pandemic and post-pandemic changes, rising inflation, and the threat of impending recession. With supply-chain problems compounding these issues for some industries, it can seem like the odds are stacked against your small business. Here are some common issues NJ small businesses face in a post-pandemic world.
1. Inflation
Rising inflation means most small businesses’ costs are up. To combat this, many small businesses have had to raise their prices—a tricky balancing act for small businesses competing with larger companies. While big box stores and larger service companies can afford to absorb more of the costs of inflation before it impacts their pricing for customers, there is less wiggle room for small businesses. Inflation costs can be especially complicated if your small business utilizes contracts with specified pricing. When you are getting less for more, it impacts your bottom line.
Be realistic about your pricing to ensure you are still making enough to keep your business prosperous. You can raise prices slowly and incrementally. Choose to increase the price of goods or services that will be less noticeable first. Being strategic can help avoid turning customers off your small business.
2. Supply Chain Challenges
One thing that has been slow to recover from the pandemic is the supply chain. Our supply chain has taken a major hit internationally and even locally over the last few years. Goods that were previously reliably acquired can take days or even weeks to receive now. This can hold up your ability to get your job done and frustrate customers used to instant service.
The best way to combat supply chain issues is to stock up on supplies early. Over-order, increase the rate of deliveries of commonly used items, and set up automated deliveries for the next few months. Buying now may also save you if inflation continues to rise. Talk with your suppliers about renegotiating the terms of your contract to see if there is any way to improve supply and pricing.
3. Recession Fears
Fears of a looming recession can make it difficult—and even scary!—to plan for the future of your small business. The constant changes in the financial climate have made it hard to project profit and costs, much less create a solid plan to build wealth for your small business. Step one: don’t panic. The best way to ensure your business can handle anything this economy throws is to stay calm and embrace the challenge. A recession might mean change, but it doesn’t have to mean failure.
Cut expenses where you can now. Slowly make changes to tighten your budget and increase your cash reserves. The more you have in savings, the less difficult choices you will need to make about taking on debt or figuring out financing in the future. The earlier you start planning and making incremental changes to your business, the less it will feel like a drastic change if a recession does impact your small business.
Joan Halter, CPA, can help you manage your business finances and create a plan to weather inflation or a recession. We have the tools to fortify your business and help you enter 2023 with financial confidence.