Though running a startup is difficult in its own right, business owners are facing new challenges now that they have to factor in inflation. According to Goldman Sachs’ survey, about 91% of small business owners are feeling the negative impacts of inflation on their own enterprises. About 73% admitted that they were struggling with increasing energy costs, while around 75% are already experiencing a rise in other business expenses.
This is a big period of uncertainty for small business owners who have to absorb the burden of these increased prices. To help you navigate through inflation, here’s a few strategies that you can follow to manage your operational expenses:
1. Assess your expenses budget for inflation
No one can estimate how long inflation will last. Therefore, it’s crucial to cover all your bases and make sure that your startup is prepared by re-evaluating your expenses budget. Having a budget is crucial for your business. It is also important to keep track of your expenses, payments, and more. That is why having an online banking system can benefit your company greatly. Read this Airwallex review to see if its benefits match your company’s objectives.
An expenses budget allows you to forecast how much you need to spend within the next few years. The U.S. Chamber of Commerce recommends breaking down your budget based on your fixed and variable costs. Fixed costs are your priority, since they are set expenses like rent or labor. However, variable costs like advertising and promotional expenses can be changed, so you can adjust how much you’re willing to set aside for these.
2. Get alternative financing for your startup
Budgeting can be difficult, especially if you’re working with limited capital. In this case, you’ll need to consider external financial sources to keep your startup up and running.
Luckily, many individuals are willing to financially support startups. In fact, the financial guides on AskMoney, which cover topics like investing, illustrate that startups can gain business funding by tapping into investors and other funding sources. You can opt to work with individual investors who want to provide capital in exchange for partial ownership of the company, or even start a crowdfunding campaign to earn extra capital while retaining full control of your startup. With the help of investors, you can get an extra push during tough times.
3. Adjust your fleet operational expenses
The rising costs of fuel are becoming alarming for both business owners and consumers. However, startup founders need to adjust accordingly, especially if your fleet is crucial to your products and services.
In this case, our article on the ‘10 Ways to Reduce Fleet Operating Costs’ points out that you can optimize the routes from your store to the destination by utilizing fleet management software or even GPS tracking technology. These innovations make it easier to find the best directions to and from places, thus improving the productivity of your driver. You can also provide proper training for your staff, so that they can follow driving practices that can reduce their fuel consumption.
4. Find ways to cut your energy costs
Startup owners have admitted that the rising energy costs is one of their problems during inflation.
As an investor of energy, retail, and mobility startup, the head of Wind Ventures recommends that startup founders learn how to continue their operations with fewer resources. While your business is still expanding, you can take this opportunity to study how renewable energy sources, efficient lighting, and proper insulation can improve your warehouse productivity and energy efficiency. Aside from that, startup founders can also adopt a remote work setup to ease the working conditions of their employees, while reducing their energy costs.
Inflation is challenging for all businesses, whether you’re running a startup or a big enterprise. As an entrepreneur, you can take this opportunity to learn how to manage your expenses, increase your capital, and guide your startup through lean times. For more business insights, check out our other articles on The Enterprise World.