Small businesses face a lot of challenges these days, including hiring and retaining employees, inflation, supply chain issues, and more. Read on as small business expert Gene Marks shares his insights to help small business owners navigate the current marketplace.
Founder, Marks Group PC
“There has never been a better time to start a small business,” says Marks, owner of Marks Group PC, a ten-person firm that provides technology and consulting services to small and medium-sized businesses.
Small business owners can do so much work from a home office by using the internet and working with customers across the world. However, entrepreneurs need to have capital — enough cash in the bank to pay bills for two to three years before making a profit — and they need to be good at math. It’s also important to have emotional capital, meaning friends and family who understand the business owner will be working very hard to get it to be profitable.
Small businesses have been at work, often in-person, throughout the pandemic. Now’s the time to reward employees for their hard work and to keep them working for you. Offering a flexible schedule, health insurance, and retirement plans are important. Higher wages are needed too.
“If people don’t think that a higher compensation is not necessary, they’re fooling themselves,” says Marks. “Wages are still not keeping up with inflation. I think that problem is going to get even worse over the next year.”
He says business owners will have to offer better pay, or they risk missing out on new talent and retaining their existing team members.
Challenged by inflation, small businesses are raising prices as needed.
“My smartest clients are raising prices, but they’re focusing those price increases on specific product lines, specific customers, and higher low-margin type of offerings,” says Marks. “They’re also leveraging their data to communicate a lot better with their customers.”
For example, small business owners are using customer relationship management systems and email systems to keep their customers well informed of any future price increases or supply chain delivery issues. Another way to cut costs is “shrinkflation,” where prices stay the same but products get smaller, such as replacing a 9.75-ounce bag with a 9.25-ounce bag of product.
Investing in technology is another way to maintain profits and save money.
“Companies now are buying robots and automation to replace their employees who aren’t coming to work anyway,” says Marks. He advises manufacturing and distribution companies to invest in warehouse technology, such as robotic arms, which can pack up boxes. Autonomous vehicles, such as drones, can move packages around and perform inventory counts, too.
It’s also smart for small businesses to invest in better automation in their systems, such as QuickBooks or Epicor.
“We’re telling our clients to spend a $1,000 and get a consultant who really knows the products well, and let them teach you all of the AI-based automation that you already have in your software,” he says, explaining you’ll learn to automate certain tasks to increase efficiency, including responding to customers, shipping, payables, and receivables.
The pandemic and conflict in Ukraine have impacted the supply chain, which can be frustrating for small businesses. Marks interviewed small businesses in the Philadelphia area and found the ones with supply chain problems simply started selling alternative products. For example, one restaurateur had to change up the menu because some foods were not available.
“Most people who’ve been doing this for a while. They realize that this, too, shall pass,” says Marks. “A few years from now, we’ll have other things to complain about.”