Small Business Toolkit: Tips for navigating today’s biggest pain points

Small businesses are encountering new challenges in the current economic climate. From rising wages to increasing interest rates, supply chain disruptions, growing inflation and a potential recession, CEOs are being forced to respond in new ways to a constantly shifting landscape.

To help small business owners navigate some of today’s biggest pain points, we’ve rounded up some go-to strategies business leaders can lean on.

The challenge: Unpredictable job market

The strategy: Be more selective in staffing

The job market remained robust in June. Despite predictions of a slowdown, non-farm payrolls increased by 372,000 for the month, topping expectations. Wages jumped 5.1%, adding to the rapid pace of gains seen all year. The continuing worker shortage has yet to show signs of abating.

To manage staffing challenges, put an emphasis on quality over quantity. Look for the most qualified workers even if they demand more in wages. Retain them by offering competitive benefits and flexible work arrangements including remote work along with in office hours. Even if conditions change, a high-level, effective staff will pay dividends.

The challenge: One supply chain crisis after another

The strategy: Get personal with your suppliers

Supply chain disruption remains one of the top problems for small businesses. Issues from lockdowns in China to high demand at home are contributing to a rolling shortage of goods from computer chips to coffee. Managers need to watch carefully for the hiccups in their industries. Cost control is a huge issue for any business finding itself paying more for materials that were once in plentiful supply.

Managing supplier relationships is one way to keep costs down and supplies flowing. Be sure to anticipate needs and communicate those needs to your suppliers well in advance. Staying on top of your own inventory and forging close relationships with your suppliers could move your company to the front of the line when supplies are scarce.

The challenge: A possible recession on the horizon

The strategy: Review your finances now

Economists are increasingly concerned that a recession in the coming months is inevitable. The Federal Reserve is determined to rein in inflation, which topped 9% in the June report. Rate hikes have so far failed to put a dent in rising prices. That could force Chairman Jerome Powell to opt for a full percentage point hike in the coming weeks. Such a supersized increase could cool inflation, but it could also shock the economy.

Small businesses need to be clear-eyed about the possibility that a hot market could turn cold in a hurry. Managing cash flow is one way to soften the blow. Be sure you’re getting paid on time and check your payables carefully. Now is the time to stockpile cash for that rainy day ahead.

But don’t stop at a cash cushion. Finding new revenue streams can make up for lost revenue in your traditional business when a recession strikes. Look for ways to expand your business now to prepare for lean times ahead.

And explore your financing options. Reach out to your banker or the Small Business Administration before you run into trouble to review those options.

Preparation is the best strategy

Preparation is the key to survival for your small business. Create a positive work environment to attract and retain good employees, forge strong relationships with your suppliers to navigate supply chain issues and make sure your finances are in tip top shape to weather a recession.