6 Ways Small Businesses — and Their Customers — Can Deal With Inflation
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Small businesses still adapting to the pandemic and labor shortages face yet another economic hurdle. Inflation is the top concern for 44% of small-business owners, according to a 2022 MetLife and U.S. Chamber of Commerce Small Business Index. It could also be a contributing factor to their decreasing morale. The Small Business Optimism Index, measured by the National Federation of Independent Business, dipped below its 48-year average for the sixth consecutive month as of June 2022.
But there’s a sliver of hope, according to some entrepreneurs. When prices rise across the board, small businesses have a secret weapon that many big-box stores don’t: There’s a relatable person behind the brand.
“Overall, I think this is a place where indie brands can win — where we can be personal and open with our community,” says Leslie Valdivia, co-founder and CEO of Vive Cosmetics, an online culture-conscious beauty brand.
Here’s how businesses can adjust, and how customers can help small businesses stay afloat, as the cost of doing business rises.
1. Leave positive reviews
For customers: If you have a great experience at a local restaurant or shop, pay it forward by letting others know. This is especially crucial for newer small businesses that don’t have an established reputation yet.
“Reviews are free,” says Jennifer Glanville, director of partnerships and collaborations at the Boston Beer Company. “Spread the word.”
For business owners: Offer a small coupon or a raffle ticket for a larger prize to customers who leave online reviews.
2. Interact online
For customers: “Liking or commenting on a post increases that brand’s credibility,” says Glanville, who also oversees Brewing the American Dream, a program that provides coaching to small businesses in the food and beverage industry. “It can increase their following.”
And now that many businesses have tighter margins due to the impacts of inflation, they have less money to spend on advertising, adds Beverly Malbranche, founder and CEO of Caribbrew, a social impact-driven coffee company.
“Sharing is supporting,” she says, explaining that it can be as simple as posting an Instagram Story.
For businesses: Apply the positive reviews strategy again. If a customer posts about your business on social media, reward them with a small prize.
3. Prepay or subscribe when you can
For customers: When a business has less cash on hand, it can be a challenge to pay bills, stock shelves and pay employees. Paying ahead of time, when you can, improves businesses’ cash flow. And it’s why companies like Caribbrew offer prepaid subscriptions for customers who know they’ll use the product repeatedly. Subscription-based models, prepaid or not, also give business owners a better idea of how much income they’ll make in the future, so that they can plan ahead.
For businesses: Make recurring payments as easy as possible for customers by choosing a payment processor that automates them.
If cash flow is an ongoing challenge, you may want to consider opening a business line of credit, which you can draw from during lean periods.
4. Pre-book appointments and keep them
For customers: Being a loyal customer helps small businesses immensely. Letting the business owner know you’ll be back ahead of time is even better.
Tara Ritchie, owner of Waggin Tails Pet Resort in Whitesburg, Kentucky, says pre-booking appointments is one of the best things you can do to help service-based businesses. When her clients do this, she can staff the salon appropriately and better predict cash flow. If you have to cancel, she adds, try to do it ahead of time so the business has time to fill the appointment. No-shows, on the other hand, leave businesses in a lurch.
For businesses: Make sure customers can book online, then send a reminder via text or email in advance of their appointment. You may want to consider charging a fee for late cancellations.
5. Be patient when businesses are short-staffed
For customers: Fanni Xie, owner of Uni Uni Bubble Tea in Appleton, Wisconsin, says lines can be long when her bubble tea cafe is short-staffed. Instead of immediately leaving a bad review because of a lengthy wait time or a problem with an order, she suggests talking to the staff first.
“I hope the customer will be more understanding about our situation,” Xie says.
For businesses: Consider offering a happy hour-style special during your slower hours to spread out the crowds.
6. Buy local year-round
For customers: Shopping small applies beyond Small Business Saturday and holiday gift giving. Making a habit of buying local and spending your money within your community — no matter how small the purchase — is a good starting point for consumers.
“The reality now with inflation is that everything is increasing,” Glanville says. “So if you could put your dollars to work for a small business, that really makes a difference for them.”
For businesses: First, make sure you know who your loyal, local customers are, whether they’re your email subscribers, Instagram followers or Saturday morning regulars. Find ways to offer them small tokens of your gratitude, like loyalty cards, occasional freebies or exclusive-access events.