Can I inflation-proof my new business?
Experts say customer value is key
Starting a new business is a challenge even in a good year. During periods of high inflation, new businesses can combat financial uncertainty by focusing on what they can control — creating value for the customer.
The bottom line: If your product or service is valuable enough, especially in uncertain times, customers will sacrifice in other ways to buy it.
Why it matters
When customers are facing higher prices on essentials like gas and groceries, they typically scrutinize a new product or service and ask, “Is this something I really need, and is it worth it?”
There will always be issues when starting a new business, such as an anticipated recession, worker shortages or supply chain roadblocks. Enterprising owners adjust to the circumstances.
“Firms need to react quickly by either raising prices, finding alternative input sources or even making the hard decision to exit a market,” says Michael Jones, academic director for the University of Cincinnati’s Kautz-Uible Economics Institute.
Some factors to consider
- Consider your timing. There may never be a perfect time to start a business, even when inflation isn’t an issue. But savvy entrepreneurs adjust to circumstances, offering customers what they really need. For example, during times of economic uncertainty, people still need food and beverages, even if they cut back on eating out.
- Use no- and low-cost digital promotion. Build and complete all your social media profiles and use emojis and hashtags for more eye-catching appeal. Cross-promote business posts and stay on top of brand storytelling. Take advantage of free social media marketing tools such as Google Analytics, Buffer, Hootsuite, TweetDeck and LinkedIn Pulse.
- Monitor profit margins. Regular analyses will help guide pricing decisions and allow you to spot looming issues early. In an environment of rapidly increasing inflation, your product lines with low profit margins may soon be unprofitable.
- Build sustainable relationships. Discover your company’s voice and build your brand around it. Create trust with customers by responding to customer feedback, positive or negative. Reward your customers for their loyalty during uncertain times. They may consider your business a blessing if the goods or services help them get through uncertain times.
- Leverage resources within the Cincinnati Innovation District. Small-business offerings include a pre-accelerator program through the UC Venture Lab, prototyping and fabrication equipment in the UC Ground Floor Makerspace and consulting services from the UC Center for Entrepreneurship.
Featured image at top: Photo by Austin Distel, Unsplash
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