In many states across the United States, the minimum wage has increased to as much as $15 per hour. While this is good news for employees, it isn’t always so good for the businesses paying that increased wage, that is, if you don’t prepare. This goes double if you have a small business that struggles to stay afloat. Where are you supposed to get that money from, and how do you prepare for this wage increase so that your business’s financials don’t suffer? Below are some tips on ways to offset the cost of a minimum wage increase.
If you’re going to give more money to your employees every month, make sure that you are not doing it for free. Double-check that your employees are using their time most optimally and to the best of their abilities. Examine the work process, remove workflow inefficiencies, and find ways to streamline business operations. You might even want to create a daily schedule so that your team is always busy, and not just sitting, waiting for direction.
Hire the best employees
Small businesses are already limited enough since they cannot afford to pay a big number of employees. Therefore, it’s imperative to make your new hires count. Since the minimum wage will be increasing, you need to bring your team up to its maximum potential. Hiring people that are only going to drag your company down is out of the question. Make sure that they have solid job experience and strong work ethic, and avoid potential employees whose resumes show that they tend to jump from job to job. Employee retention is crucial to your bottom line, as some studies have shown that replacing a salaried employee costs the equivalent of a six to nine months’ salary.
Research the funding options
In an ideal world, the only funding we would need consists of the automatic sales process and cutting costs. In the real world, however, things are not that easy, so you may want to research alternatives to improve your cash flow. In these cases, peer-to-peer loans or cash advances may be a very good opportunity for your small business.
Buyers may not like it, but to survive as a business in a world where everything is inflating, you may also need to update your prices accordingly. This happens eventually with every product or service after some time, and it just makes sense considering that you have to pay higher salaries to your employees. If you’re worried that you’ll lose customers after this, keep in mind that the competition will also be forced to increase their rates, and they’ll be doing it for the same reasons.
In the end, keep calm, strategize, and plan ahead. An increase in the minimum wage doesn’t mean doom of your small business. It just means that you need to make some slight adjustments to keep up.
This article was written by Marie Flounoy for Small Business Pulse