Inflation might make it more difficult to run your small business. As inflation continues, dollars buy less, which makes everything costlier and negatively affects your profits. During this period, prices of consumer goods spike, including food, gas, real estate, and airfare. Such costs impact business and personal purchases. This means that you and your workers feel a hit. While a period of inflation is a costly time to run a business, working with a CPA in Plymouth, MA, and taking other steps can protect you from the impacts of this economic situation. Here are the steps you should take:
Keep Your Books Up-to-Date
During inflation, you must be in full control of your books. Carelessly handling your books could undermine your efforts to reduce costs and increase efficiencies. You need a strong bookkeeping system to survive in an inflationary environment and an accountant can help you establish this.
If you are not up-to-date with logging receipts and expenses, you can outsource this job to a CPA or bookkeeper, so you can gain back control. With a strong bookkeeping system in place, you can keep track of expenses and profits, as well as the impacts of inflation on your business. Also, a CPA can help improve your tax situation by staying abreast of changes to deductions.
Improve Your Profit Margins
Once your books are clean, examine your income and expenses across different aspects of your business. You want to boost productivity without the need to increase your expenditures. Is your service or product offering a reasonable return on investment? Can you boost income in certain areas to counter higher expenses? Determine where you can improve business efficiency and minimize costs.
Reduce Operating Expenses
Do not buy what you do not need. This can help you cut costs and improve net profitability. Usually, savings can be achieved through your operating expenses. These expenses include legal fees, marketing, advertising, office supplies, rent, and subscriptions. Property taxes, vehicle expenses, and travel are also operating expenses. Your accounting partner can look into these expenses and determine where you can cut costs.
To save money, you can conduct virtual meetings instead of in-person meetings. Another option is to downsize your office space and let your workers work from home. Also, you can adjust your marketing expenses. You can save on insurance by doing research.
When you talk about financial decisions like cost-cutting matters, include your employees. They can help you determine how and where to streamline, which expenditures to cut, and look for areas to boost productivity and morale without negatively affecting the bottom line.