Rising Interest Rates and Ongoing Inflation: Things to Consider for Your Business

Entrepreneur Fund

July 6, 2022

Interest rates have been at historic lows for the last couple of years. Now interest rates are rising and expected to continue to increase over time. Beyond interest rates, we are all experiencing higher costs for nearly everything in our daily lives. It’s a great time to look at your business and prepare for the future.  Here are a few things our team recommends you consider so that you can make the best plan for your business:

Review Your Business Loans

Rising interest rates can shrink your cashflow. If your business has any variable rate loans, you will see your monthly loan payments rise. In some cases, this can mean monthly payment increases of hundreds of dollars. Review all your business loans (short term and long term) to see if there are opportunities to refinance your variable rate loans to fixed rates. The Entrepreneur Fund team or your banker can help you with this.

Taking this refinance step now will help you know what your payments will be throughout this period of increasing rates. Something else to consider during this time of inflation is stretching the term of your loan to allow your business to keep more cash on hand if inflation continues to eat away at your cash flow. 

Cost of Goods and Operations

As we can all see in the prices we pay, inflation is causing issues with nearly every expense, both personally and within our business. Nearly all business owners’ cost of goods has increased and dramatically in some cases. Your suppliers have already raised their prices to keep up with the increased cost of doing business. That supplier increase has an immediate effect on your monthly cashflow. Your pricing must be reviewed at a minimum of 1-2 times per month, to allow you to make the needed changes, to keep your margins intact. Hoping supplier prices will go down, is not a plan and will lead to negative cash flows for some.

An audit of the products you offer, alongside the cost of your supplies may lead you to consider removing some products for this season. Prices will eventually stabilize and allow you to add these products profitably.

If you haven’t already, look at your business operations and see if there are ways you can streamline and perhaps automate how you track and complete each sale. There has never been a better time to consider process changes than today!  Look for large and small strategies to save your business some money each month. Every bit counts.

Consider Your Customers

The high interest rates and inflation our economy is experiencing is affecting everyone. These increases in cost can make your customers more apprehensive to purchase your product. Your customer has a limited number of discretionary dollars to spend. Get creative with your sales, marketing, and events to inspire spending. Keep your website and social media fresh to allow your message to get through the amazing amount of content we all receive.

Talk with Your Lender

If rising interest rates are restricting your cashflow, talk with your lender about your options. At the Entrepreneur Fund if there’s a creative solution to be found, you can bet our team will help you find it. Our team of loan officers can review your business loans and recommend whether refinancing is a good idea. Our business advising team can provide support by reviewing your cost of goods, operations and assist with promotions that will encourage sales.

Taking time to understand your financial situation, and making a plan that will help your business make it through these economic challenges will ensure you are able to take advantage of opportunities when they arise.

New to the Entrepreneur Fund? Please complete a Contact Us form to get connected with our team.

No items found.