Doesn’t it seem like every time you order something, whether it is product for the shelves, more wrapping paper for gifts, ink for the printer, bags to put purchased product in, or even lunch for the crew, that the prices have gone up?  It is so constant, it has become the norm, and you just expect it.

It used to be OK to just let these price increases eat a bit of your margin, but the little margin bites get to the point where they become a mouthful, and you are moving money but not keeping any!  It’s time to think about what you can do to easily manage or at least become more aware of where these bites come from and what you can do about them before you give up and just increase prices.

The hardest tool to employ, for me anyway, is a cost audit.  Gather all your costs from last year.  If that is too much for you, gather from half a year or even the last quarter.  Even if you accomplish just the last 4 months it will make the next time you do it easier and you will be more apt to follow through. Categorize them into fixed costs and variable costs.  Here is the hard, time-consuming part, go through each cost and investigate what you can do to lower them.  Maybe a discount if you pay rent ahead?  Maybe a budget plan for the utilities is possible? Maybe a checking account with no min balance that pays some interest?  Each cost may have something you can do that would save you some money.

Optimize your operational efficiency.  According to Small Business Exchange, the following practices should save some money.  Automate repetitive tasks, this may mean you have to invest in some software, but if technology can do repetitive tasks, your staff can concentrate on the activities that generate revenue.  Make sure you are on top of your inventory management.  This may again involve some initial software investment.  But knowing what, how much and when to order without using the time to look, or check will save some money.  Cross train your employees.  The more jobs a person can handle the less opportunity there is for paying someone who isn’t doing anything.  It also keeps your staff interested and motivated.  If someone is out, someone else can do that job.  A more flexible team is a more effective team.

Prices always increase at some point, no matter how great a job you have done with the above ideas, it’s going to happen.  Small Business Exchange has a few suggestions as to how to make this more palatable for your customers.  Give your customers a heads-up and a short explanation.  Transparency helps build your customer’s relationships.  Also, they know what is happening in the retail world lately, it’s not going to be a shock.  When a price increase is the only thing left, Small Business Exchange suggests increasing prices in small increments.  They also suggest offering price increases in tiers.  This may not be reasonable for all categories of products, but if it is, it allows customers a choice and everyone loves a choice!

There are many things to try to make your business costs decrease, rather than just automatically increasing prices at retail.  Hopefully some of the above ideas can be of help to you!