No business is ever really safe from the unpredictable trends of economic inflation.
Thankfully, there are some smart
and creative ways to prepare your business so you can survive and thrive through inflation.
Hi. I'm Mei Pak. I help makers, artists,
and designers, grow handmade businesses from scratch
and turn them into sustainable and inflation-proof careers.
Back when you started your business, you probably already knew that you needed to jump
through a lot of hoops just to ensure your business's success.
You already knew that running a business isn't easy.
Right? The problem is the economy is largely out of your control
and it's much harder to prepare yourself for something so unpredictable.
Inflation specifically is the darkest time that any handmade business can go through.
The scary thing about inflation is losing money.
You won't be able to make a living out of your business if you're struggling to make ends meet.
So in this video, I wanna talk about how to empower your business so it withstands inflation.
First, what is inflation? Inflation is
what happens when the prices of goods and services rise uncontrollably at alarming rates.
So even basic necessities like food
and clothing become unaffordable
because the average household income does not rise along with those inflation rates.
Sadly, most people can't keep up with inflation,
so making ends meet really becomes a struggle.
Does your handmade business stand a chance against inflation?
Inflation affects small handmade businesses the worst.
Because of the rising prices of basic necessities,
people tend to prioritize these and spend less on their wants.
So nobody wants to spend their hard earned money on things that serve not
very practical purpose in their everyday survival.
And handmade products are usually little luxuries that
people can't afford in place of basic expenses.
And this means reduced income for handmade businesses.
During inflation, business expenses like raw materials,
shipping, packaging, rent, and electricity also increase.
So having less income and more expenses eats at our profit margins.
This is a formula for disaster. Inflation really makes it hard for handmade businesses to stay afloat.
So what do you do? The frustrating part of all of this is that you can't really do
anything to influence inflation rates themselves,
but what you can do is to make your business sustainable and inflation proof.
So here are four tips to thrive through inflation.
Number one, never lower your prices.
Instead, raise them. When you're experiencing a decrease in sales,
I know it's tempting to lower your prices to make your products more attractive to your customers.
But the first rule of business is that you shouldn't lower your prices just for the sake of sales.
Lowering your prices will cut further into your profit margins which will make keeping up
with the rising cost of your expenses that much more difficult.
You are running a business
and this means you have to earn enough money to cover your expenses and make a profit.
Otherwise, you're not really making a fair living out of your business,
so don't feel guilty about raising your prices.
Manage your cash flow. Since we're talking about business finances,
it is important to manage your cash flow wisely.
Know exactly how much money comes in and out of your business.
During inflation, I suggest that you minimize your outflow by cutting out unnecessary expenses.
For example, audit your overhead expenses
and decide which ones are not worth prioritizing right now.
If you have paid subscriptions to apps or tools that you can live without,
cancel them for now. Knowing how to optimize your profit well may help you allocate funds
for growing your business even in the middle of inflation.
This is frankly something I didn't do myself very frequently.
And that's a surefire way
for your expenses to get out of hand quickly if you're not keeping an eye on the ball.
As business owners, we wear so many hats,
and one of those should be being the CFO,
the Chief Financial Officer. All this needs to mean is that you get comfortable with your finances
so you're not operating or making decisions blindly.
It's always super eye opening for me to dig into my numbers,
especially because how we feel our business is doing is often not the same as it really is doing.
Number three, keep up with your customers' lifestyles and adjust your product catalog.
Your customers buying habits change.
What do your customers typically do to cope with inflation?
How do they unwind? What do they do outside of work?
To make more sales even in the middle of recession,
you need to look at what your customers' lifestyles are like
and create products that make their lives better and easier for them.
Don't be afraid to let go of products that aren't selling well
and create new ones that better suit your target market now.
Business survival often means redirecting your focus to more profitable products.
For example, maybe say you are a handmade skincare business,
and you notice that your customers are advocating more on self care during these difficult times.
Maybe you dig a little deeper and you find out that they like taking time to make themselves a warm,
relaxing bath after a long and stressful work day.
This right here is a good opportunity to explore different
handmade bath products that they might enjoy.
Maybe you can craft some bath bombs or bath salts,
or perhaps you can also add some scent of candles to your catalog to
help make their bath even more refreshing.
Your next move should depend on what your customers want,
and this is usually to elevate their lifestyle and make themselves feel better.
Again, in times of recession, people prioritize buying needs over wants.
When you create new offers that are irresistible,
meaning they are both a need and a want
so buying them is totally worth it, that is how you find the sweet spot.
So be open-minded, be ready to potentially shift your inventory to focus on some new product ideas.
Never stop marketing your products.
You won't be able to sell any products if you don't spend time marketing them.
You need to keep money coming in. So double up on your marketing efforts.
You need to send out a message to your ideal customers
and tell them that you understand what they need and you have a product that will meet that need.
By doing this you're actively telling the world that you're open
for business and you're getting more people interested in buying your products.
So whether you're marketing to older customers or an entirely new audience,
I recommend to never stop marketing your products.
Marketing is the one thing that you should never cut back on even during inflation.
It is your most important means of keeping your business alive.
Inflation is definitely one of the most difficult challenges that any business owner has to face.
We all can feel the effects of inflation in our everyday lives,
so it is important that online store owners like us learn how to survive.
And this means turning your handmade business into inflation-proof businesses.
What are you doing to cope with increasing cost?
I love for you to let me know in the comments
and maybe other people can learn from what you have to share.
And if you found this video helpful, please give it a thumbs up and subscribe.
And then stay on to watch this next video on the screen
for more tips on growing your handmade business.