A Trump Proposal May Increase Labor Prices: How Your Small Business Can Prepare
Written by
Jordan Rosenfeld
Edited by
Molly Sullivan
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As the start of President-elect Donald Trump’s second presidency draws nearer, many small-business owners are on alert to see how his campaign promises will play out.
One such promise, to deport millions of immigrants whose legal status as citizens may be in progress or in question, could have sweeping effects on numerous industries that rely upon these workers.
If his deportations become a reality, labor costs could rise as a result. Business experts suggested some ways small-business owners prepare for high labor costs and possibly offset them.
Audit Your Current Expenses
Small-business owner Brian Lim, the founder and CEO of iHeartRaves and Into the AM, suggested business owners nervous about labor costs start by auditing their current expenses.
This allows you to identify areas where you can cut or consider renegotiating supplier contracts, adopting energy-efficient practices, and even pull back on nonessential costs such as business travel, he said. “For many, assessing recurring costs and trimming unnecessary expenses can immediately free up funds,” he said.
Improve Staff Productivity Through Automation
This could also be a good time for business owners to consider investing in automation tools, which Lim said can help save them significant time by streamlining repetitive tasks and allowing employees to concentrate more on valuable assignments.
“Businesses can also outsource certain functions — such as digital marketing — to access specialized skills while avoiding full-time staff hiring costs,” he said.
Consider Remote Workers
When possible, businesses might want to look into incorporating remote and freelance workers, especially if it can bring down what Lim called “operational flexibility to your business, hence cutting down on fixed overheads like office space, utilities and benefits.”
Prioritize Cash Flow
Cash flow management is important for small- to medium-sized businesses, so a major step is ensuring your business “has ample available cash to operate efficiently,” according to Ryan Rosett, co-CEO and founder of Credibly, a lending platform that champions small businesses and their owners.
Cash flow management “is vital to survival in an inflationary and higher labor cost environment,” he said. One way to do this is to optimize scheduling to avoid unnecessary overtime and align staffing levels with customer demand, Rosett explained.
Reduce Expenses
Obviously, reducing expenses will be top of mind for most small-business owners. A few examples for this, Rosett said, could include:
- Reducing business travel
- Implementing expense limits
- Moderating company perks
- Limiting tech subscriptions
- Trimming marketing and/or adjusting to lower cost media outlets
A business could also implement a reward for employees to cut cost and waste, Rosett said. “Innovations coming from workers themselves are usually highly effective if rewarded.”
Offer Flexible Working Arrangements
Flexible working arrangements might help increase productivity, Rosett said.
There are many tools to improve output/productivity, including offering a flexible work arrangement that might include hybrid, flexible hours or remote work.
“The business would need proper controls in place to measure KPIs to ensure the output has in fact improved. Providing career growth opportunities by offering learning and development programs to improve the employees skills allows them to feel more vested in their respective role. We found this to be very effective at Credibly.”
Improve Company Culture
Company culture can also play a big role in employee motivation, Rosett said.
“We are big believers in company culture. There needs to be balance between work and personal life. Recognizing and celebrating success creates a culture of inclusion and we found it to boost the employees motivation and engagement, which resulted in higher quality output and production.”
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