With prices jumping more than 8% over the past year or so, it’s not surprising that a majority of small business owners recently said they’re concerned about the impact of inflation. That’s according to the September 2022 MetLife and U.S. Chamber of Commerce Small Business Index. Inflation certainly presents challenges, yet you can act to help your business survive — and possibly even thrive — during these volatile economic times. 

Here are some steps that can help your business stay solvent:

Act prudently, but swiftly. Given the typically temporary nature of inflation, it can be tempting to assume it won’t be a challenge in a few months. Although waiting may be a good strategy in some cases, not taking action may lead to even more difficult decisions — say, cutting workers’ hours rather than reducing salary increases. 

Review inflation’s impact by product line. This will help you determine if changes to your product mix are warranted. For instance, it may make sense to boost production of an item that appeals to customers who are budget-conscious. 

Identify opportunities to save. While it’s always important to watch for extraneous expenses, it becomes even more necessary when prices are rising. If raw material prices jump, consider whether it makes sense to use other suppliers. When possible, get multiple bids for items like insurance and phone contracts. Can you reduce packaging, saving both money and natural resources? If your cash flow and space can handle it, consider stocking up on supplies, thus mitigating the impact of future price increases. Also review longer-term expenses. If more employees are working remotely, you might be able to reduce office space, or explore relocating to lower-cost regions of the country. 

Review staffing. This doesn’t necessarily mean cutting headcount. You might be able to take less drastic steps first. These might include putting a freeze on hiring and salary increases and limiting overtime. You may want to invest a modest amount to cross-train employees. They can then handle additional functions, which may allow you to hold off on additional hires or minimize overtime.

Check your credit. Interest rates may continue to rise, so you’ll want to determine if it makes sense to secure a loan or a line of credit sooner rather than later. Having funds available can provide breathing room and allow you to take advantage of opportunities, like investing in automation solutions. 

Keep employees in the loop. Especially in an uncertain economy, employees tend to worry about their jobs. Keeping quiet about the company’s outlook may exacerbate this stress and cut into productivity. By sharing your outlook for the company to some extent, you can calm fears. Plus, letting employees know how their work can contribute to the company’s ability to navigate the current challenges may spark ideas that can boost performance. For example, they may come up with ways to cut expenses.

Consider investing in technology. Solutions that boost productivity and efficiency can blunt the impact of inflation. Technology that improves the customer experience may boost customer loyalty — a key attribute when customers may be skittish about spending. 

Review prices. Refusing to consider price increases during an inflationary period can put your business at risk. While few customers welcome price increases, many understand the need for them. You’ll want to communicate with clients before making changes, so they can adjust their own budgets. 



Monitor cash flow. Watch accounts receivable and reach out if you see clients significantly falling behind. If they continue to struggle to pay their bills, you may need to decide whether you can afford to continue working with them. 

An inflationary period can offer opportunity, as some products and markets tend to do well in this environment. For instance, you might be able to gain market share by targeting affluent customers who aren’t as impacted by higher prices.



The optimal combination of steps will vary by company. Your accounting professional can work with you to identify the actions most likely to help your organization withstand an inflationary environment and stay profitable over the long haul.