As the year draws to a close, I know that inflation and tight cash flow are weighing on the minds of many business owners. It’s completely normal to feel the pressures of financial strain, and the instinct to hustle harder, push more sales, ramp up marketing, and scrape for cash. It’s overwhelming. I’ve been there and I know how easy it is to fall into that mindset.

But here’s where I’ve learned that clarity on the most vital need in your business is essential. When you’re facing these types of financial challenges, understanding where to focus your efforts can help relieve immediate pressure and keep you moving forward without burning out.

Facing inflation and cash flow struggles: Why knowing your vital need is key

Rising costs are affecting cash flow and it’s easy to get caught up in daily survival mode. Whether it’s increasing materials costs, payroll pressure, or those ever-persistent fixed expenses, inflation is impacting every business differently. But when you know your business’s unique area of need, you can take specific steps that are most impactful right now.

The Fix This Next methodology doesn’t focus on a long list of tasks or random solutions. Instead, it’s about identifying the one vital need that demands your attention and focus today. This is where the Business Priority Pyramid (BPP) comes into play. The BPP begins with sales and profitability, then moves upward to order, impact, and legacy. It provides a clear, structured guide to pinpoint what your business needs most at any given moment.

Let’s look at the specific steps you can take to tackle the dual challenges of inflation and cash flow, so you can move forward with confidence.

Step 1: Tight cash flow? Start by improving profitability

When cash flow is tight, one of the most effective ways to alleviate the pressure is to focus on your profit. Inflation eats into margins, so improving profitability can help you make the most of the revenue you already have. Here are three strategies to start with:

• Re-evaluate your pricing: With costs rising, small pricing adjustments can help offset the additional expenses without alienating your customers. Review your pricing strategy to see if slight increases are feasible without impacting demand.

• Focus on high-margin offerings: Look at your product or service mix to identify which ones bring in the highest margins. By putting more energy into these high-margin areas, you’ll increase your profit without adding significant costs.

• Cut unnecessary costs: Review your expenses with a fine-tooth comb. Sometimes, small, seemingly insignificant expenses can add up over time. Look for those that don’t directly contribute to growth and reduce or eliminate them to free up cash flow.

Step 2: Streamline operations by creating order

Once you’ve got a handle on profitability, the next layer in the BPP to focus on is Order – creating an efficient, streamlined operation that doesn’t waste time or money. Inflation and tight cash flow can quickly reveal inefficiencies in day-to-day operations. If you’re noticing issues like supply chain delays, redundant processes, or ballooning operational costs, this step is for you.

Streamlining operations can mean making small changes that yield big results, such as:

• Automating repetitive tasks: Free up your team’s time and resources by identifying tasks that can be automated. It could be as simple as setting up auto-billing or as complex as automating your marketing outreach. Every bit helps.

• Improving vendor relations: Consider negotiating better rates with current vendors or seeking out more affordable options. Even modest savings here can have a big impact over time.

• Cross-training your team: Equip your team members with skills that allow them to cover multiple roles. This can give you greater flexibility, reduce the need for additional hires, and help you avoid staffing shortages—particularly helpful when budgets are tight.

Step 3: Prioritize impact over expansion

When cash flow is stretched, growth and expansion should take a back seat. Instead, focus on impact and solidifying what’s already working. The Impact layer of the BPP helps you identify where your business is making a real difference for customers and doubling down on those areas, which can provide stability and support customer loyalty in challenging times.

Consider these approaches:

• Strengthening customer relationships: Reach out to customers to show them they matter. This could mean personalized emails, loyalty discounts, or simply thanking them for their business. Strong customer connections can pay off in repeat business, referrals, and a more predictable revenue stream.

• Doubling down on what’s already working: Instead of spreading resources across new initiatives, direct them toward products or services that are already successful. This can help you maximize existing strengths without taking on the added risk or cost of new ventures.

Moving forward with clarity

With inflation, tight cash flow, and end-of-year pressures, planning for the future can feel daunting. But FTN gives you a clear roadmap to address today’s financial challenges and set yourself up for success in the coming year. By focusing on the most vital need in your business, you can relieve some of the immediate financial stress while building a stable foundation for growth.

To get started, take a moment to evaluate where your business stands by using the Fix This Next Evaluation and the Fix This Next One Sheet. These are free tools that can help you identify your business’s unique needs, whether that’s cash flow or another area in the BPP. Sometimes, a bit of clarity is all you need to feel a renewed sense of direction.

Let’s finish this quarter strong together with intention, not just reaction.

You’ve got this!

-Mike

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