Automation Can Ease Inflation Impact on Small Business

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Small and medium-sized businesses continue to face headwinds due to inflation. A new survey from JP Morgan Chase reveals that 45% of small businesses think inflation is their top challenge, up from 20% the previous year. On the other hand, nearly all (91%) of midsized businesses said they’re experiencing inflation challenges.

To adapt to current economic conditions, businesses continue to re-evaluate various aspects of their operations such as pricing and sourcing of materials. For example, 83% of midsize businesses have passed the cost of doing business to consumers. Meanwhile, 68% of small businesses have raised prices on some of their products or services.

Moreover, 82% of midsized businesses said that the price increases are likely to continue as a way for them to recoup rising business expenses. Also, the majority of small businesses expect inflation-driven higher costs of operations to stay. Based on the survey, SMEs cited labor costs, shipping and materials costs, and rent as the top reasons for rising business expenses.

Automation Bolsters Business Revenues

Though there have been signs that inflation is starting to moderate and should cool over this year, businesses may still want to look for solutions that could help cope with rising prices and dipping profitability.

At the height of the pandemic, SMEs turned to technology for business continuity. A report from the U.S. Chamber of Commerce highlighted how American business owners “have found paths to resilience in part due to the edge provided by the technology platform.” Businesses that adopted apps like accounting and payroll software, marketing platforms, and productivity tools were able to overcome challenges during the pandemic. In the report, 86% of small businesses said technology helped their business survive during COVID-19, while 77% said they would struggle to survive without access to their technology platforms.

Using digital solutions in different business processes could once again help businesses thrive in these challenging times. Investments in automation, for example, have shown positive results in saving costs and increasing productivity—two factors crucial to ease the inflation impact on small business owners. Automation investments showed direct links to increased business revenues (up 5%-7%), job growth (up 4%-7%), and long-term productivity (up 15%).

Automating Business Processes

Automation can simplify areas of a business by automating tasks. It’s particularly beneficial to SMEs struggling to fill positions or who want to save on labor costs. Automation is no longer reserved for big corporations since SaaS-based automation software has allowed smaller companies to automate aspects of their business.

For solo entrepreneurs, automation features in inventory software can save time by keeping track of stock levels. This means they can dedicate more hours to creative, high-value work to grow their business rather than manually checking inventory. For companies with employees, automating repetitive tasks takes the load off workers. As a result, it can lead to increased productivity, improved output for the business, and savings from wages as the need to hire more people to accomplish the same amount of work declines.

Marketing is another area where SMEs can utilize the full potential of automation. Business owners can use AI-powered automated features for more effective lead scoring, behavioral analytics, and customer engagement. Automation software provides businesses with a timely way to respond to leads by embedding shortcodes on forms on their websites. They can then send automatic-reply emails to inbound leads or assign them leads to salespeople for a follow-up message.

SMEs with online stores can also utilize automation to boost ecommerce sales. Automation software features come in handy when stores want to send predetermined emails to remind customers to restock, renew subscriptions, or check out a time-limited promo. They’re also the technology that power some of the well-known cart abandonment software retailers use. Investing in automation could help ecommerce stores regain sales from abandoned merchandise. That’s a worthwhile endeavor since the estimated value of abandoned merchandise in online carts was $4 trillion in 2021.