7 Ways to Manage and Promote Your Online Business During Inflation

Unless you’ve been living under a rock for the past few months, you’ll be well aware that many parts of the world are experiencing a rise in prices. From fuel to the cost of food, everything seems to be more expensive. 

A look into recent statistics showed that in October 2022, inflation rose by 7.7% compared to October 2021 in the US alone. The rise in costs for goods and services means businesses are having to be careful about how they spend, manage and promote the business.

For online businesses, there are several benefits that make it more cost-effective than owning a physical store. However, that doesn’t mean the cost of running a business is significantly less. For the small savings being made on leasing or renting a property, the rise of inflation still leaves very little room for financial error.

While the pandemic was enough of a body blow for businesses, the repercussions of what was an unprecedented disruption to many, are now taking effect. 

How does a business adapt during inflation? More importantly, how does it thrive during this time? In this guide, you’ll learn all there is to know about guiding your online business through the turbulent waves of inflation. Hopefully, with these tips under your belt, it’ll help lift a little bit of that financial burden of worry that’s being felt.

What causes inflation?

Inflation has four general causes and these include:

• Demand-pull inflation
• Cost-push inflation
• Built-in inflation
• Increase in money supply

Demand-pull inflation is caused by consumers’ demands for a product or service, which results in a price hike. Cost-push inflation happens when the cost to produce products increases and therefore pushes prices higher. 

Built-in inflation happens when workers demand higher wages to help with the rising living costs. As a business, this type of inflation forces you to raise your own prices too.

The impact of COVID-19 on current inflation

Cost-push inflation is what we saw most notably during COVID-19. The cost of producing items increased due to the numerous supply chain disruptions that occurred due to labor shortages and lack of supplies in some cases.

As a result, the impact of COVID-19 has influenced the current inflation that we’re now experiencing on a global scale. The world’s economies are starting to feel the painful impact that the pandemic caused and it shows no sign of slowing down soon.

With that being said, for any business online, it’s imperative that the current business operations are assessed. It’s important for the business to spend money cautiously but with the intent to make a high ROI.

There are several ways to help your business navigate inflation not only to survive but thrive in this environment.

7 ways to manage and promote your online business

While the tides are against you as a business when it comes to inflation, it’s still possible to be successful. Being careful with business decisions and mitigating risks can help reduce any financial impact that occurs.

1. Assess marketing software and tools.

What current marketing software and tools are available in your company’s toolkit? Are some really needed? What about those that you’ve had for a while but have become too expensive? 

With the rise of SaaS, it makes complete sense to explore other software and tools that have popped up on the market in recent years. It may be that you find something more appropriate and cost-effective than what you currently pay for.

For email marketing, for example, there are cheap Constant Contact alternatives that are more affordable for those businesses that need to save money. While these tools are relatively cheap, as soon as you’ve subscribed to a half dozen, they become expensive.

To help keep expenditures low, take a look at what each department is spending on marketing tools and try to streamline as many into one platform as possible. It might be that you’re using one tool for social media scheduling and another for content editing when there is a tool out there that does both.

Try to examine the business platforms in use as well. You might be surprised at how much you can save by switching to free open-source e-commerce platforms that host your business, as many of them are also equipped with useful features such as website builders, email marketing tools, blogs, and forums. You will be hitting two birds with one stone, allowing you to cut costs significantly and streamline your business.

2. Consider streamlining business operations to cut costs.

Streamlining business operations has proven to be a great way of cutting costs and saving money. With Statistia finding that 48% of enterprises reduce their operating costs by streamlining existing business processes, it makes sense to follow suit. Here are a few suggestions to help streamline business operations.

• Look at what processes can be automated
• Consider removing multiple applications for one process
• Know when to outsource services
• Invest in staff skills development

By streamlining business processes, it will ensure that little time is lost and more importantly, finances aren’t being haphazardly wasted. Making sure everyone is on the same page is also beneficial to avoid mistakes being made.

3. Understand pricing for your buyers by conducting research.

One of the mistakes that are made when it comes to business inflation is that businesses end up shooting themselves in the foot by putting up pricing too much.

While no customers want to be paying more for what they’re already getting, most will likely be happy to spend the extra few dollars.

However, putting it up double or triple the price it was at, will outprice a lot of your customers. To help understand the parameters you have for hiking up prices, it’s important to ask your customers how much they’re willing to pay.

Conducting market research can be helpful to know what customers want from the business but also what they’re reasonably willing to pay before they walk away. It’s important not to lose customers you’ve worked so hard to retain just to widen your profit margins.

4. Avoid raising prices and stagger them where possible.

As part of the inflation, rising prices often result in a blanket increase across all the products or services that you offer as a business. However, hiking up prices can outprice customers and that’s not financially productive for the business.

If prices still need to go up, try to avoid doing this for every single product or service. Instead, stagger this rise in price so that it remains affordable for all customers.

You will also find it beneficial to look at other opportunities where you can bring in extra funds. Perhaps running a promotion where customers get three for two on goods or services would be useful. 

Yes, they do get the freebie but they’ve made for two at full price. They may have only bought one product if that promotion wasn’t available.

Maybe there are some goods or services that you stop selling due to the lack of profit margins for the business. This will be more beneficial than having to raise prices as a result.

5. Introduce automation and AI services.

A growing technology that has been picked up by businesses over the years is automation and AI services. Did you know that more than a ⅓ of businesses have five or more automated divisions in place?

While human processes are good to have in places, humans make errors. Computers will rarely make an error unless it’s a human error that’s caused it.

Assessing which departments or areas of business can benefit from automation can help reduce the amount of money spent by each department.

For instance, you might not yet need an accounting department as a small business, so you might benefit from using your own automated receipts to add to the legitimacy of your business.
You don’t have to be a tech wizard for this. All you have to do is find an editable cash receipt template and upload it to your system. AI and technology have made it easy for you!
Using something as simple as a professional-looking template will not only add to the legitimacy of your company, but will also make it easier for you and your customers to make fast, accurate, and secure exchanges.

Artificial intelligence has become a key influence within business operations and making operations easier to manage. As we know, streamlining is financially beneficial to do in order to minimize business expenditures.

Automation and AI are great for customer service support too, especially with the appearance of live chat and chatbots on many business websites nowadays.

6. Improve cash flow and invoice management.

Cash flow and money management in general can prove to be a challenge when it comes to running a business. Even outside of inflation, chasing invoices and tracking down money can be a headache.

Problems with cash flow is often a contributor to business failure, so it’s important to look at improving this where possible. Especially during inflation, getting invoices paid on time is critical. Without a healthy cash flow and invoices being paid on time, it leaves the bank balance dangerously low.

As a result, businesses with these problems will end up borrowing money to cover the shortfall and this can spiral easily into debt if not managed well.

7. Analyze spending within the business overall.

With inflation becoming an economic state of play for a while, it’s worthwhile analyzing the business spend overall so that it can be improved for both the short-term and long-term.

We want to hope that this won’t last forever but with the financial impact of COVID-19 being so great, it’s likely many parts of the world will be in this financial state for some time.

Try to reduce costs in your supply chain and internally within the business operations. Building cash reserves is a good habit to implement to provide an emergency fund, if and when it’s needed.

Survive the storms of inflation this year and beyond

With no end date to this inflation, it’s important that your business is making financially-savvy decisions to help reduce costs and build business funds back up. At the moment, the outlook looks bleak for many. Therefore, it’s useful to be smart with marketing opportunities and manage the business carefully when it comes to your finances.