Inflation is crippling consumer spending and making it more expensive to run a business. According to the U.S. Bureau of Labor Statistics, the inflation rate for April 2023 was 5.0%. People in the U.S. haven’t seen an inflation statistic like this since 1981, so for many construction businesses, this is uncharted territory. Here are some tips to help your company stay afloat, shared below by The Broker.
Get a Small Business Grant or Loan
If your construction company is experiencing sticker shock for your monthly expenses and supplies, one option is to apply for a small business grant from the government. Some businesses may still qualify for grant money that doesn’t have to be paid back. You could also apply for a small business loan to help your organization make ends meet.
Set Aside Cash Reserves
Construction business owners should also consider setting aside some money for a cash reserve. A cash reserve for a business is a type of emergency fund that should only be used when your accounting is coming up short. This could help with higher interest rates, taxes, big purchases or other unexpected expenses.
Market on Social Media
PostBeyond notes that social media marketing is one of the most efficient and effective ways to connect with customers and promote your business. Best of all, social media marketing is relatively affordable, making it a great option for small businesses. In fact, with careful planning and execution, social media marketing can help your business save money. For example, by using free platforms like Instagram, you can reach a large audience without spending any money on advertising.
In addition to social media, content marketing is an essential part of any online marketing strategy. Content marketing involves creating and sharing valuable content that educates and engages with a target audience. Examples of content marketing include blog posts, ebooks, videos, infographics, podcasts, and more. Through content marketing, your business can build trust and credibility with its audience.
And don’t forget about the ever-relevant importance of “old school” marketing, including the use of business cards. A well-designed business card remains an effective way to brand your company, as customers and clients are able to repeatedly refer to your information as needed, a tangible way to stay in front of people’s eyes. You can make business cards by using templates online that give you personalization with your own logo, contact info, fonts, and color scheme.
Retain Your Best Employees
One thing to not cut back on is your budget for staffing. Some companies may be tempted to cut back on raises or incentives for their employees during a tough time, but that may end up costing you more recruiting and hiring fees if you lose your best team members. Invest in retaining your employees with better benefits and higher salaries.
Use Software to Automate Tasks
Another way you can cut costs is to automate some of your company’s tasks with software. Invest in small business apps to save money and time. Use accounting software for better accuracy and faster customer payments. There are many options on the market, so be sure to compare your options before purchasing. You don’t want to pay for more than you will use.
Stockpile Low-Priced Supplies
Business owners may also decide to stockpile certain types of supplies or inventory if they anticipate higher prices coming. If you have the storage space to stock dry goods, raw materials or paper supplies that are necessary for your operations, it may make financial sense.
Cut Back on Monthly Expenses
You should also look for opportunities to save more of your revenue each month by cutting back on some monthly expenses. Learn some negotiating strategies to help save money with your vendors. Outsource any type of tasks your staff isn’t qualified to do. Consider downsizing your offices or going virtual.
Pay Attention to Your Credit Score
As a business owner, it is important to pay attention to your credit score during times of inflation. Your credit score is an evaluation of how likely you are to make payments on time and in full. It helps lenders understand the risk of lending money or offering services to you, based on your past behavior and current financial situation. During periods of inflation, when the cost of goods and services rises rapidly, lenders are more apprehensive about approving loans due to the higher costs associated with defaults. A good credit score can help you get better terms from lenders and increase your chances of getting approved for financing.
Pay Down High-Interest Debt
Finally, you can open up more of your monthly budget if you work to pay down high-interest debt. It may not make sense to get a consolidation loan while inflation and interest rates are high, so work with your accountant or financial planner to create a reasonable payment plan for business debt.
Surviving high inflation rates requires some wiggle room in your budget and some creative financing. Whether you’re marketing on social media, cutting back on expenses, or reducing debt, you can save money and maintain your profitability so your construction business can survive.
For business financing needs, including working capital, commercial real estate, equipment leasing, equipment financing, factoring, and more, contact The Broker today!
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