How a home-based business can beat inflation

Deepa Krishnan

Inflation is a great leveller but small businesses feel the pinch even more. So if your business involves paying staff salaries, sourcing supplies from vendors and running a supply chain, doing your daily accounts could be very depressing. That’s because, unlike large set-ups, small businesses cannot absorb the cost of rising inflation.
 
So, in these tough times, how can home-based entrepreneurs ensure quality standards, keep vendors and customers happy, grow their businesses, get new business, and, above all, make a viable profit? Here are some suggestions to beat the inflation blues.
 
1. Spend within your means. Don't borrow. Buy what you can afford: You need to clearly identify your fixed components, how much they cost, and then make a flow chart. If, for example, your budget includes salaries, rent and manufacturing costs, figure out how much you need to allocate towards these expenses. For the rest, you will have to decide what you need and how much you need to spend on it. Costs will creep up without you even realising it, so keep track of your outgoings.
 
Vineeta Nair, founder of design and decor firm Artnlight and a former art director in the advertising field, explains, "Keep an eagle eye on expenses and balance what needs to go out and when, in terms of payments, and when your profits come in. Planning is key.” She says a written or computerised account of every penny is mandatory.
 
Also, keep track of all your subscriptions. Cancel some if you must. There are a lot of free applications online. So, if you can live without premium subscriptions, go for it. 2. Rework your profit formula: R Sridhar, an innovation coach, started his company IdeasRS in 2000, after a career in advertising. His golden rule is to focus on revenue. "Revenue – profit = costs; NOT Revenue – Costs = Profits." Which means, once you determine your margin of profit, you have to make do with what’s left. THAT’s your budget for your costs.
 
3. Spend time and energy on marketing: Nifty, inexpensive marketing can bring unexpected results, advises Sridhar. “To widen your network, make sure you’re well-informed, interesting and interested. Look for opportunities everywhere. Explain clearly what you do to everyone at home, your wife, daughter, in-laws, everyone, without exception. Every time someone asks, ‘What does your son-in-law do?’, and the answer is, ‘he is a consultant’, it’s a wasted opportunity!” 4. Learn to multi-task. Focus on improving your product: We assume that working from home makes for a flexible schedule. But that assumption could get you into serious trouble. When you work from home, you have to be doubly careful to avoid distractions that make work pile up. At the other extreme, you could end up working non-stop, which is also not healthy, Sridhar points out.
 
"The worst type of inertia is when you avoid going out and meeting people – customers, influencers and friends – and actively looking for new ways to serve your customers," he says. Unless you focus on new business, you cannot bring in new revenue. Here’s another red flag – failure to keep abreast of latest developments in your field.
 
5. Work with fewer but smarter people: Vineeta Nair says it’s not quantity but quality that matters. She cites an example. For her design and décor business, it is essential for her to have regular suppliers, vendors and manufacturers. She maintains a good working relationship with them, to keep her business running smoothly. Tying up with a logistics partner has also reduced courier costs considerably. 6. Keep tabs on additional costs. Everything adds up: Naveli Mathur, CEO of Naveli Entrerprise Solutions, an HR firm, says that apart from saving on overheads and other costs by operating her office from her home, she makes sure all her variable costs are also accounted for. "I have included the variable component in staff salaries. That way, my additional costs are largely external. Also, I avoid flashy, unnecessary expenses." Nair advises that you buy in bulk and recycle as much as possible. "When I take part in exhibitions, I always share the stall so that the rent is halved and footfalls double because of two sets of clientele." 7. If something is not working, change it!: Keep innovating your business process. Don't be afraid to try out new things. The more business you get, the less the costs will matter. Some parting advice to young entrepreneurs: "Stay aggressive, stay hungry and be willing to learn from your mistakes," says Nair.
 
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