When something like stock market volatility makes you feel like you’re leaving everything to chance, there are ways that you can help your business to weather the storm. In fact, across Texas, advocates for independent businesses are fighting to protect your rights and pass legislation to stabilize and rebuild small businesses in the wake of COVID-19.
So whether you’re running a small business for the first time or you’ve been in operation for decades, take a look at our tips for how to keep your business thriving in times of economic uncertainty.
Market volatility happens when stocks no longer have a stable price and fluctuate more than normal (usually around 5% or more is considered high market volatility). Some industries see greater daily fluctuations than others, so when the normally steady industries are experiencing big changes, that’s when you need to pay attention. This typically happens when an external event occurs, like COVID-19, and all industries experience high levels of volatility.
When the economy is up and down, there’s an increased chance of both businesses and individuals getting into financial trouble. This can have a big impact on financial planning for small businesses, as customers become cautious around spending money and taking out a loan is more difficult. Interest rates can also rise to counter the risk that lenders face in uncertain economic times.
While COVID-19 continues to create market volatility, studies have found that 72% of small business owners across the nation remain optimistic about the future of their operations. With the right business practices in mind, owners who are willing to adapt and prepare for the unknown are putting themselves in a much better position to see ongoing success.
Keep Business Hours and Operations as Consistent as Possible
For many small businesses, maintaining consistent operating hours over the last two years has been difficult. Whether due to a lack of goods from supply issues, low profitability thanks to fewer customers, or even ongoing staffing problems, keeping the doors open on a regular basis is a challenge that most business owners have faced.
Whenever possible, small businesses will benefit from sticking to set open hours, even if you have fewer products on the shelves or employees to help customers. Consider cross-training your team members to provide adequate coverage across each department or role.
With new skills to add to their resume, your employees are now more valuable to both your business and the wider world of work. Keep them incentivized to stay with your business through pay increases or additional perks to thank them for their commitment and loyalty.
Work to Retain and Hire Great Employees
Even in the days before the pandemic, the landscape of the employee/employer relationship was beginning to shift. Job seekers are looking for positions with higher wages, better benefits, improved work/life balance, and job security wherever possible. It’s your responsibility to show them that your business meets those expectations.
But it’s not only those looking for jobs that you need to think about. Keeping your existing employees satisfied has significant long-term benefits for you as a business owner. If someone leaves and you have a position to fill, the amount of money and time that you invest can make a huge difference to your bottom line.
Marketing open positions, reviewing applications, interviewing candidates, then training your new employee all adds up. Research has found that you can be looking at upwards of $1,500 per hire on job training alone. By offering your existing team members better benefits like more PTO, lower insurance costs, flexible or remote work opportunities, or matching 401K contributions, you can ultimately save money by keeping your top talent who will help your business to grow in the coming months and years.
Adapt to Supply Chain Issues and Delays
You’ve likely experienced supply issues, or at least delays, somewhere in your business. It’s a problem that almost everyone is facing, in every industry and all over the country. Being prepared to shift your approach as issues arise is necessary in this climate.
If your business heavily relies on the international supply chain for finished goods or materials, it’s worth looking into local manufacturers or distributors in your state or region. When even the smallest issue in the supply chain can severely impact your profitability, finding alternatives to your manufacturing and distribution channels is essential for your business’s survival.
Anticipate Increased Prices on Goods and Materials
In volatile markets, it’s not only the actual delivery of goods that’s impacted. Thanks to shortages and delays at all stages of the manufacturing process, the price of goods and materials that are created rises quickly. This is known as scarcity pricing, where suppliers price at a premium rate due to the high levels of competition for a limited amount of goods and materials.
These higher prices can put an even greater strain on your budget, forcing small businesses to either accept a lower profit margin or pass along these costs to customers by increasing product prices.
As we’ve seen, in a turbulent economy, anything can happen. Where possible, buffer your business finances ahead of anticipated issues in your supply chain. Speak with your local bank about small business loans in Texas to avoid cutting into your profit margins. Around 27% of small businesses are also starting emergency funds. Look into how to apply for a business savings account and put aside what you can to protect your future earnings.
Diversify Investments and Stick to Your Financial Plan
When the stock market constantly changes, it can be tempting to make big adjustments to your investments. But holding steady is one of the best moves that you can make for long-term stability. Remember that the market fluctuates constantly and, if you don’t need quick access to those funds, playing it safe and sticking to your pre-determined investment plan will usually work out better. Don’t let today’s fear and panic drive you to make a detrimental move that could have a significant impact down the line.
If you’ve never done so before, consider looking into wealth management services in Texas and finding a lender who can provide guidance around investing for small business owners. They can give you expert advice if you’re thinking about diversifying your assets to account for market fluctuations.
Be Proactive in Your Business’s Finances
There are plenty of challenges that come up when you’re running a small business. Add in unpredictable economic changes and simple operating tasks can feel like an uphill struggle. But with decisive action, your business can continue to thrive under the most difficult circumstances.
As experienced business loan lenders in Houston, Austin, Galveston and beyond, Moody Bank’s wealth management and commercial team are here to support you. Contact us today to discuss your needs and work towards a positive future for your small business.