Business fundamentals

Six ways to prepare your business for the rising minimum wage

3 min read


The minimum wage has taken the first steps towards the $20 target set for 2021. With consumers increasingly focusing on price and the internet making comparing different vendors incredibly easy, it’s unlikely business owners will be able to make up for the increased labour costs by charging a higher fee for their products or services.

1. Cut expenses

When margins are already tight, absorbing the cost of the minimum wage increase is not an option. Have a good look at the books and try to find expenses that are not contributing (enough) toward your business’ bottom line. Some easy wins could be found in travel costs, switching to cloud services, and shipping. Review your subscription plans – such as mobile phones and cloud storage –to determine whether they are adequate for your needs and monitor your supply costs to see if improvements can be made.

2. Increase productivity

If you’re looking to reduce the number of hours or employees, you need an efficient team. View your staff as an investment: training costs will pay in return if you manage your employees the right way. Review your company’s policies and procedures to see where productivity gains can be made and have a critical look at your organisational chart to see whether there are any redundancies. If you haven’t already introduced performance-based incentives, see whether you can find a way to reward productive employees.

3. Automate and outsource

Are your employees spending time on non-core tasks such as bookkeeping, social media posts, cleaning, or checking references? There are companies specialising in these services, and handy tools to automate the more repetitive tasks. This allows your staff to do what they do best, while potentially reducing your expenses.

4. Reduce operating costs

While replacing your machinery and appliances might be an investment, upgrading to the latest solutions can eventually save you money thanks to increased efficiency. Other areas you can save are printing, distribution costs, climate control and insulation, and office and warehouse space. Perhaps some of your employees prefer to work from home for part of the week.

5. Add value

Increasing the prices for your products or services may not be a viable option, rather consider ‘bundling services’ or products into a new package, or offer a discount on a future purchase to generate repeat business.

6. Update your marketing

The rise in the minimum wage also brings opportunity as it will improve the financial situation of many workers, which means more consumers with more cash. Don’t forget to look at your marketing plans and consider creating or enhancing a proposition based on the increased affordability. Alternatively it might be more efficient to reduce output and focus solely on the highest yielding customer group or products.

Article

Benefit from the higher minimum wage

Smart business owners make the most out of the rising minimum wage,