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How to Deal With Rising Costs at Your Small Business

Guest post by: Lily Faden

Article Overview: Four ideas for how to battle rising costs at your small business.

How to Deal With Rising Costs at Your Small Business

Ever since the economic downturn in 2008, small business owners across the country and the globe have been coping with one of the most difficult effects of the recession: rising costs. The price of gasoline, raw materials, food, and almost every other product involved in making your small business run has increased in the past few years. To add insult to injury, customers also have less to spend on your product, as they too are facing rising costs, and in many cases, unemployment. There are several solutions that you as a business owner can implement to insure that your business stays afloat during tough economic times.

1. Consider the exchange rate

Even if your products aren't doing as well at home in the U.S. - the weakening of the U.S. dollar makes U.S.-made products more desirable abroad. Consider what's in demand in other countries and try marketing your product to these different customer bases. It could also be the case that your product faces less competition abroad because of its unique status as an exported good.

2. Make more affordable versions of your product

Even if your current customers associate your business with having more high end, expensive products, in this economy, no one is going to complain about spending less money. Introducing a different version of your product for a lower price could be the very move that saves your business during tough times. Best of all, the more affordable products will still carry your business' name, which could even draw in a whole new customer base to your product. Ensuring that you have items available for a lower cost means that your most loyal customers won't have to look elsewhere if they too are cutting costs.

3. Tell customers about your rising credit card costs

Many customers don't think twice before pulling out the plastic. But for you as a business owner, every credit card transaction could be costing you a hefty amount, especially as credit card companies are charging more for each credit card transaction. One strategy you can implement is being open and honest with your customer. According to an article in the Wall Street Journal, a coffee shop in Jamaica Plain, Massachusetts, called Ula Cafe, has done just this: they posted a sign that says "Please reserve use of your credit cards to pay for purchases of $10 or more." Though it may be blunt, it helps the customer remember that you are doing your best to cut costs as well.

4. Implement small price increases

Don't wait till the last minute. If it's necessary to increase the prices of your product, it is easier for the customer for it to occur in small doses instead of one fell swoop. Many customers won't even notice if you are implementing small, across the board price increases. You will find that your customers are more willing than you think to accept small price increases, especially those that have been loyal to your business for some time.

You may also want to consider a business cash advance to ensure that your company has sufficient cash flow for the coming year.

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Article Tags: cutting costs, increasing costs, rising costs, saving money



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