Surviving Inflation As A Small Business in Nigeria

Surviving Inflation As A Small Business in Nigeria

My dear small business owner, Forbes has confirmed that inflation go soon reach your side. Therefore, it would be best if you were concerned about how inflation affects your business.

Let’s delve into it- firstly, inflation is not a technical issue to understand. The reality is that it’s always happening, and you must do everything you can to prepare for it.

What does inflation even mean?

Inflation measures the progressive increase in the price of goods and services over a set period. Consumers start buying less as the cost of products and services increases.

In simple terms, the price of products and services is increasing by a landslide, and there is no comprehensive reasoning behind it in the minds of consumers, so they start buying in less quantity.

For example, remember when foods like plantain, rice and tomatoes were at an affordable price? I mean, when a sack of rice was 13,000 before all the crazy happened and turned it to 22,000 plus! Yes, that’s what inflation does.

Bonus-You should know that inflation is standard in every country’s economy. It only becomes a burden when it is too high and unmanageable.

How does Inflation Affect Small Businesses?

This is how the inflation affects you and your business:

Increased costs: The price you pay to purchase goods and services gets higher; you pay your suppliers more money than before.

Higher Prices: This is a ripple effect from the above, increased Costs. Because you almost cannot afford not to make your money back after you paid more than usual to your suppliers, you try to make up for it by increasing your prices to match. Usually, this pushes customers to buy less and less.

Managing and cutting expenses: Here, your eyes have seen red with the two other effects, so you start to think of creative ways to save money and cut costs. This is when you start to reduce stock inventory by buying less, laying off staff and cutting down on unnecessary expenses to cope.

Tighter Profit Margins: This is the worst-case scenario where all the desperation sets in because the value of your profit is no longer the same; it makes it harder for your business to grow and make money like it used to. The value of money has changed. This will be inevitable.

Get an Account number for your business
Get an Account number for your business

How can you survive the inflation?

Manage your cash flow smartly

If you don’t know this, know it now and know peace—Cashflow is King. Your business can only survive if money flows in and out, meaning customers are paying you, and you’re paying for business expenses on your end.

These are the two things you can do—on the spending side, focus on creative ways to cut down costs and reduce expenses. But, on the other hand, with your customers, understand that everyone is feeling the heat of the inflation, so make reasonable price increments to avoid losing them altogether. But don’t put yourself at a disadvantage in the process.

Work on a new and improved business plan

At this point, you should forget about your previous business plan because things have changed. You have to reevaluate your business processes, your profit margins and whatnot.

To make this easy for you, start by making notes of new business strategies you try out weekly. It makes it easier to identify places and areas where your business can improve. Then, reanalyze employees, their roles, productivity and output.

Stock up on supplies now.

The thing you should know about inflations and price increases is that it never goes back down. It stays that way. But you can use that to your advantage; how? If you have the extra monetary resources, stock up, buy more from your supplier and keep it. Nothing excessive, obviously, but just enough that you won’t feel the heat when next you need to pile up on inventory.

Cut expenses when and where possible.

It’s crucial that in a time like this, when prices are higher, you should focus on finding a way out. This is very important, reduce cost wherever possible.

For instance, if you can cut down on employee costs, do it; if you need to cancel expenses irrelevant to your business’s output, in the long run, do it.

Be ready for new customers.

Another thing that inflation brings that is inevitable is a new customer segment. It’s usually an unravelling time for many businesses because, in the beginning, customers start buying less because they can comprehend the price increase. But then a surge of hope comes at you because new customers with fresh minds and perspectives are on their way to buy from you.

Will Inflation Last?

This is a tough reality to come to terms with, but as a small business owner, you should expect it. Unfortunately, all you can do to prepare for the challenges tied to inflations is try out some of the above steps to help you and your business stay floating through the tough times.

Run your business with Ease,

A crucial part of what the Kippa app does for your business is analyzing financial reports to help you make better business decisions; help you understand cash flow. And overall, it gives you insights that reveal the bigger picture of how your business progresses.

Measure the growth of your business in a click
Measure the growth of your business in a click

All the tools you need to start/run/ grow your business, your go-to bookkeeping, accounting and business bank app; Kippa gives your business a way to measure your overall performance. It also provides information to make decisions related to your business and helps you ascertain your revenue and income.

Hafeedoh Balogun

Hafeedoh Balogun