A minimum wage increase impacts millions of businesses. But small businesses in particular can be crippled by it. They can’t simply write bigger cheques to their employees without increasing their revenue or they’ll be out of business. It’s a tough spot to be in—but one that must be dealt with.
Even with tough margins and a slow economy, the government can force a minimum wage increase on business owners. Once a minimum wage increase goes into effect, it might be too late to take the steps needed to ensure your business’s survival. So to ensure that your business doesn’t get hit too hard by it, you need to keep your head in the game and prepare for it.
Use these tips below and you might be able to weather the storm.
Raise Your Prices
We know, you don’t want to raise your prices—you risk losing valued customers if you do. But sometimes, this is your only option. You’ll need more revenue to make up the cost of the minimum wage increase. If you’re paying your employees minimum wage, chances are your competitors are, too, so they’ll likely increase their prices as well, putting you all on an even playing field. If you prepare ahead of time, you can gradually increase your prices instead of making one big increase at once, so it’s not as difficult for your customers to handle.
Meet with Your Accountant
You have an accountant for a reason—he can help you look through the books and find ways to cut expenses where possible. He’s an expert in finances so even though you’ve probably poured through your books and squeezed every penny that you could, your accountant might be able to find ways to cut costs that hadn’t occurred to you.
If you can’t find any area of your business where you can reduce your expenses, you can try increasing your productivity. Take a close look at your schedules to see if you’re maximizing your workforce. Outsource your time-consuming back office responsibilities so you can spend more time on your core responsibilities, such as sales and services.
Analyze every department and consider how you can optimize performance—how you can get the most out of your workforce. The more productive your business is, the more money you can save in the long run.
If you’re going to have to pay your hourly employees more, you should find the best talent that can give you more for your money. Hiring the right workers from the start and focusing on retention can increase productivity and reduce turnover costs. You should also consider whether or not you could benefit from hiring independent contractors and temp workers rather than permanent employees. This can significantly cut your payroll costs.
Invest in Technology
Technological advances have come a long way in recent years and you should be taking advantage of them to get more done with fewer resources. Consider what type of automation would help your business. Which type of technology will allow you to have fewer employees on staff? If you’re in retail or the restaurant business, online ordering could benefit your company. Using direct deposit can save you valuable time at every pay period. Using a CRM system can streamline the way you sell your products or services, so you can sell more with less effort. The type of technology you invest in will depend on the type of business you run.
Though they won’t guarantee you’ll stay afloat, these tips can help you deal with a minimum wage increase.