The current state of inflation is posing many challenges for small businesses, but one of the primary stressors is skyrocketing rent. This issue can lead to problems with survival, especially with the added pressure of fewer customers post-pandemic. Thankfully, some landlords are willing to reduce their rents to avoid vacancies and empty storefronts. However, it is not just rent that is inflating; entrepreneurs are feeling pressured to cut expenses while still retaining employees during “The Great Resignation.” To help small business owners save money and navigate inflationary pressures, Rieva Lesonsky interviewed Ben Johnston, COO of Kapitus, an alternative lender.
To renegotiate with landlords, business owners should be transparent about their financial struggles and come prepared with the current market rents of comparable locations. For those with stores and restaurants, there is a rebounding storefront rental market, particularly in residential neighborhoods. However, the same cannot be said for office buildings, as companies are still being flexible with remote work and not requiring everyone to return to the office fully. It may be wise to reduce office space to help preserve margins, especially during uncertain economic times.
To combat inflation in other ways, many businesses are implementing software and technology to reduce labor requirements, and manufacturers are developing robotic and 3D printing technologies. Some businesses are looking overseas to secure lower-cost labor, particularly as the strength of the U.S. dollar makes it more compelling. Since salary and benefit cuts are not viable options during this labor market, businesses should focus on making employees more efficient and improving employee satisfaction with low-cost ideas like flexible work schedules and remote work.
Finally, during times of economic stress, companies can leverage technology to manufacture products locally, shorten the supply chain, and improve delivery times. Today’s customers are willing to pay a premium for speed and reliability, providing an opportunity to increase revenue. Overall, while inflation poses many challenges, small business owners can take various steps to navigate their way through the current economic climate.
