Tips on navigating economic uncertainty for small business owners

In today’s unpredictable economic climate, many small business owners are struggling to maintain stability amid inflation and fluctuating costs.

With rates hovering around 3% and no clear direction on where they’ll go next, inflation has become a critical concern.

The U.S. Bureau of Labor Statistics points to increases in food, shelter and energy costs; supply chain disruptions; and labor shortages as primary drivers. These forces squeeze profit margins, requiring businesses to adapt quickly to stay profitable.

The Better Business Bureau (BBB) offers actionable strategies to help small business owners navigate this economic uncertainty.

Key among them is reducing expenses. Business owners should closely examine their current spending to ensure it aligns with strategic goals. Wasteful habits — like unnecessary office supply usage or inefficient delivery routes — should be addressed immediately. Online advertising, if not delivering adequate return on investment, should be adjusted or paused. Businesses also are encouraged to drop low-margin products and concentrate on bestsellers with higher profits. This type of expense scrutiny allows businesses to cut costs without sacrificing quality.

Another proactive measure is to buy in bulk when possible. If certain supplies are guaranteed to be needed throughout the year, purchasing them now can avoid future price hikes and potentially secure bulk discounts. This approach not only stabilizes costs but also helps maintain inventory levels and avoid stockouts during critical periods.

Diversifying suppliers is another effective risk-mitigation strategy. Relying on a single vendor for critical materials or services creates vulnerability if that supplier faces issues or raises prices. Maintaining relationships with multiple suppliers ensures flexibility and offers the ability to negotiate better terms. However, it’s equally important to assess each supplier’s cybersecurity protocols. Many businesses fall victim to cyberattacks through weak links in their supply chain, making digital security a top concern when choosing partners.

Understanding which products and services are most profitable is essential. During tough economic times, consumer behavior changes — some customers may opt for lower-priced items, while others may pay more for solutions that ease stress or enhance convenience. Business owners should focus their efforts and time on what generates the best results and be willing to delegate or streamline other tasks accordingly. This might include giving employees more autonomy or bringing in part-time help to free up leadership time for strategic decision-making.

When raising prices becomes necessary to offset inflation, transparency is key. Price increases should be reasonable — enough to maintain profitability without alienating loyal customers. Most importantly, business owners must avoid “drip pricing” or hidden fees. Instead, they should clearly communicate any changes and explain the reasons behind them. Honest communication builds trust, which can preserve customer loyalty even during tough times.

Customer service is one area where businesses can gain a competitive edge without significant financial investment. Exceptional service shows customers that their satisfaction matters. Even in the face of price increases, customers are more likely to remain loyal if they feel valued and appreciated. Rather than cutting staff to save money, businesses should consider hiring part-time employees or freelancers. This can help maintain service quality without the full financial burden of additional full-time employees.

Technology, including artificial intelligence, offers another pathway for navigating economic challenges. Small businesses can use AI and other digital tools to automate tasks, improve efficiency, and reduce labor costs. From streamlining inventory management to enhancing customer support, technology can take pressure off staff and help the business operate more smoothly in a tight labor market.

In sum, small business owners facing economic uncertainty can protect and even strengthen their operations by focusing on cost control, supplier flexibility, smart pricing, customer loyalty, and technological investment. These practical, BBB-recommended steps not only help maintain profitability but also position a business for long-term resilience and growth.

• Steve J. Bernas is president and CEO of the Better Business Bureau and can be reached at sbernas@chicago.bbb.org.