10 Ways Business Owners Cope with Rising Costs
Rising gas prices, healthcare costs, and declining sales resulting from the Great Recession provide challenges to staying in business. Here we offer 10 ways to cut costs and stimulate sales during the economic drought.
1. Introduce new, lower-priced products
Whether it is designing a new line of dresses with lower-cost fabrics or a revised menu with cheaper ingredients, inventing new, cost-effective items taps into your creativity to save dollars.
2. Location, location, location
Are you using location to your advantage? Think about using local suppliers who may be able to offer discounted rates due to lower delivery costs. Consolidate scheduling of all business engagements in a certain area to one day so you don’t have to make several trips to the same place.
3. Alter size
Making smaller products and charging the same price can help absorb some of your increased costs. Creating a bigger, more expensive version of your product disguises the price increase.
4. Reduce credit card purchases
Credit card companies charge for each purchase made by customers. Notify customers that you only accept credit card purchases starting at a certain amount (usually $10).
5. Use gradual price increases
If you must increase prices, be kind to your customers and do it incrementally. This way they may not even notice. If it creates a stir, try dealing with the problem by informing them of the date and amount of the increase in advance.
6. Communicate with suppliers
Ask suppliers if they can offer you some sort of break (since they are often more able to absorb costs). Or, ask them how you might devise a cost-cutting solution.
7. Take advantage of technology
Conduct business meetings by Skype instead of face-to-face. If possible, think about getting rid of office space completely and communicating with staff solely by e-mail, telephone, and Skype. Weekly in-person meetings can be employed to iron out the details.
Do all the things that would do at home to save money. Turn off the lights in rooms that aren’t being used. Re-use items or have older things repaired instead of purchasing new ones. Buy used products. Use the heater and air conditioner less.
9. Think international
With a weakened dollar, the chances of selling your product abroad are even easier. Think about expanding your market into Europe or English-speaking countries in East Asia, but be sure to do your research beforehand so that your product is correctly tailored to the preferences of foreign buyers.
10. Build relationships
Try to form relationships with other business owners to buy in bulk to cut costs. Join a local business owners’ organization to network and find people with businesses similar to yours.
While the current economic situation may seem dire, there is no reason to succumb to fear. Be resourceful. Communicating with customers and suppliers, tightening your belt, and being creative can help you to save money and realize how many resources you already possess.
1) Business Week: “Five Ways Business Owners Cope with Rising Costs”
2) Articlesbase: “How to Deal with Rising Costs at Your Small Business”
3) Times Union: “Dealing with Rising Costs”
4) USA Today: "Rising prices pummeling your profits? You’ve got options”