The Green Sheet Online Edition

April 11, 2022 • Issue 22:04:01

Inspiration

Meeting the inflation challenge

The United States has experienced significant economic success in the COVID-19 era. Last year, according to a number of recent studies, we saw the largest economic growth year-over-year since 1984, 38 years ago. 2021 also saw a record-breaking number of new businesses open their doors, albeit many of those doors were virtual.

In the payments sphere, when consumers and merchants alike looked for alternatives to in-person transactions, especially those involving cash, payment companies already had the requisite technology and the know-how, and they seized the day, helping to shepherd in a digital transactions explosion, which is having a transformative effect on commerce.

Even as the BA.2 COVID variant spreads and no one knows what its trajectory will be, a can-to, we'll-figure-it-out attitude prevails while we strategize with merchants about how to address pressing challenges such as supply chain disruption and staffing shortages. But now, another shadow lurks in the form of inflation, which is worrying the mom-and-pop businesses that are the backbone of many a payment company's portfolio. A recent survey of 1,576 SMB owners conducted by Small Business for America's Future revealed that inflation is the top concern for 60 percent of respondents.

What SMBs can do

The good news is there are actions SMB owners can take individually to mitigate the effects inflation has on their businesses, customers and employees. They can:

• Seek to expand supplier relationships, with an eye for adding suppliers that can provide comparable goods at a lower cost.
• Negotiate prices with current suppliers, and then lock them in for as long a term as possible.
• Revamp product offerings, retaining items or services patrons would truly miss and replacing less popular/nonessential items with others that provide something new and highly appealing at a lower price point.
• Increase prices incrementally so consumers aren't hit with a big increase all at once, and strive to limit price increases to items that are more optional, not essential.
• Communicate openly with customers about why some price increases are necessary.
• Develop employee training programs so current employees can become eligible for promotions to higher-paying positions, and promote from within. This can boost morale and help motivated employees deal with the financial impact of inflation.
• Negotiate employee discounts for certain goods and services. Depending on company size, these could include such things as cell phone plans, fuel or takeout from favorite local restaurants.
• Do an extra review of business expenses to see if some can be eliminated.

What government might do

We hold diverse opinions regarding what governments should and shouldn't do to manage inflation and other critical issues our country and the world face. I'm not going to suggest specific actions here. I will say, though, that now is an ideal time for us to contact our local, state and federal representatives to provide feedback on solutions already planned or underway, as well as share our ideas for what can be done to help SMBs and consumers thrive despite the inflation challenge.

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