Amidst the challenging landscape of the past year, businesses, regardless of their nature, faced significant hurdles-high interest rates rendered even minor credit card debts a weighty burden for small business proprietors. As 2024 is approaching, these entrepreneurs continue to grapple with substantial concerns.
Fortunately, there is a glimmer of hope. According to a recent survey by Bank of America, small business owners are beginning to experience some relief from the challenges disrupting their supply chains. Additionally, they are finding attracting and retaining skilled personnel more manageable.
Nevertheless, a significant apprehension looms as the new year approaches - inflation. An overwhelming 78% of small business proprietors have identified inflation as their primary concern for 2024.
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Inflation Trends: Easing Concerns for Small Businesses
Since mid-2021, rising prices have been a constant worry, but lately, they have not been as much of an issue. To put it in perspective, the Federal Reserve, responsible for managing the country's money matters, aims for a steady 2% price increase over time.
Based on the Consumer Price Index, the yearly price rise was recorded at 3.1% in November. This figure is slightly above the ideal 2%, but not significantly.
The Federal Reserve itself believes that price increases might slow down even more. At its recent meeting, the Fed noted that economic growth has cooled off since its robust performance in the third quarter. It also observed a slowdown in new job creation compared to earlier in the year.
It does not spell imminent economic trouble or a recession, so there's no need for alarm. However, it does hint that economic expansion is losing steam, which might lead to a drop in price increases in 2024.
Moreover, in October, New Hampshire's unemployment rate was 2.1%, a slight increase from September but lower than the previous year. The state reported around 743,160 employed and 16,300 unemployed individuals, contrasting with the national rate of 3.9%. In a significant economic milestone, the state's gross product surpassed $100 billion in 2022, marking a substantial growth from 2021.
Despite inflation slowing economic growth, Phil Sletten of the New Hampshire Fiscal Policy Institute pointed out that the economy had outperformed expectations with a 5.6% GDP growth in the third quarter, much higher than the forecasted 0.6%.
How Small Business Owners Can Deal with Inflation
Predicting when inflation will return to the Federal Reserve's ideal 2% level is challenging. Small business owners concerned about rising costs in the upcoming year should consider conducting a detailed review of their expenses at the end of 2023.
It means evaluating all outgoings and identifying unnecessary spendings like underperforming marketing services or overpriced courier fees.
Exploring ways to make your business more efficient or increase revenue is also wise. It could involve using social media management tools to boost sales. Remember, such investments often qualify as tax deductions.
In tough financial times due to inflation, consider scaling back on non-essential employee benefits. While cutting back on perks like free coffee might be challenging, maintaining job security is likely more important to your staff than extra amenities.
With hopes that inflation will ease in 2024, it's crucial to manage and reduce expenses wherever possible proactively.
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