Entrepreneurship Tips For Growth

Four Tips to Help You Beat Inflation

Inflation in Nigeria has been a persistent problem in recent years. We have been facing high inflation rates, which has been driven by factors such as rising food prices, the devaluation of the Naira, and high costs associated with fuel and electricity. Between 2019 and 2022 Nigeria’s inflation rate rose from 11.40% to 23.14%. So how does a small business navigate such harsh macroeconomic conditions?

I’m not promising you a miracle but these tips should help keep your business afloat.

 

1. Raise prices: This is the obvious culprit, if the cost of living and production soars it only makes sense that you increase the price of your products/service. However, it’s important to be mindful of how high you want to raise prices, as significant price hikes can have a negative impact on customer loyalty.

When considering a price increase, you should first evaluate the impact it will have on your bottom line. You should also consider the prices of your competitors, as well as the overall economic conditions and consumer sentiment. You also need to be able to justify and adequately communicate the price increase with your customers so they don’t feel exploited.

It’s also important to consider the long-term impact of a price increase. A significant price hike may bring in more revenue in the short term, but it could also drive customers away and make it difficult to attract new business in the future. Therefore, you should consider implementing gradual price increases over time, rather than raising prices all at once.

Another alternative is to offer a premium service or product, which will help to counterbalance the increase in prices, by providing an added value to customers that can justify the increase.

2. Increase efficiency: Increasing efficiency in operations can help to reduce costs and improve profitability, without having to raise prices on products or services.

You can increase efficiency by streamlining processes. This can involve identifying areas of the business that are overly complex or time-consuming, and finding ways to simplify them. For example, automation tools can be used to streamline accounting processes or implement a more efficient inventory management system.

Another key aspect to improve efficiency is to optimize the use of resources. This can include identifying ways to make better use of existing equipment and facilities or finding ways to reduce waste and increase productivity.

3. Diversify revenue streams: This involves finding new ways to generate income and reduce reliance on a single source of revenue.

You can do this by offering new products or services. This can include introducing new product lines or finding new ways to package or deliver existing products and services.

Revenue diversification can also be done by finding new ways to generate income. This can include offering consulting services, licensing your products or services, or developing new revenue streams through online platforms such as e-commerce or subscription-based services. It’s important to note that diversifying revenue streams requires a strategic approach and thorough market research, you should carefully evaluate the potential of new products, services, or markets before committing resources to them.

4. Cut costs: By reducing expenses, you can maintain profitability and protect your bottom line without increasing the price of your product/service.

One way to cut costs is by reducing employee remunerations. This involves cutting back on salaries or other perks previously provided. However, it’s important to be mindful of how this is done, as it could have a negative impact on employee morale and retention.

You can also cut costs by negotiating better deals with suppliers. This can include negotiating lower prices for raw materials or finding new suppliers that offer more competitive prices. You should also consider buying in bulk to take advantage of volume discounts.

It’s important to note that cutting costs should be approached strategically, the most important expenses should be prioritised. The potential impact of cutting costs on business operations and customer satisfaction should also be evaluated.

These are trying times for everyone and every individual and business is looking for ways to stay afloat till the storm passes. In the midst of all this, it is important to keep in mind that running a business is a marathon, not a sprint. As a business owner, you always have to think long-term, you should not sacrifice future viability for short-term gain. The customer is king and your employees are their stewards. It is your job to keep them both happy.

 

Joseph Adeoye

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Joseph Adeoye

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