As we entered the New Year, businesses continue to be hampered by a near-unprecedented lack of supplies and materials. Besides items that have received widespread national attention like toilet paper and computer chips for cars, the slowdown in the supply chain is affecting everything from electronic devices to couches to sneakers—and plenty in between.
To complicate matters for businesses operating in a competitive environment, the supply chain disruption is being compounded by a tight labor market, especially for drivers and other delivery people. It all adds up to long delays, reduced profits, and frustration for everyone involved.
What can your small business do? Consider these practical suggestions.
- Communicate with empathy. The worst thing you can do is clam up when customers start questioning orders or complaining about backlogs. Be upfront about the problems you’re facing.
- Underpromise and overdeliver. It’s better to lower expectations than it is to set a high bar that can’t be reached. Don’t make promises you can’t keep. Customers will be pleasantly surprised if you exceed your initial estimates.
- Be creative about pricing. If your production costs are shooting through the roof, it should be reflected in your pricing structure. Of course, you can’t pass on the entire extra cost to customers, but factor increases into the equation.
- Rethink lead times. If you can afford to do it, order supplies for several months ahead of time. Stock up on essentials for your business when you can.
- Find new partners. Your business may be forced to turn to different suppliers or vendors. If you can fund quality materials, expand your business contacts and regular resources.
- Think outside the box. Try a different approach that may mitigate the shortages. For example, you might find a suitable and available replacement for a product component. Don’t just accept the status quo.
Finally, use a healthy dose of common sense to navigate through this crisis. Your business advisors, like us here at Dana McGuffin, CPA, P.C. can provide assistance.