While some employees may be rejoicing for an extra bump in pay, business owners are probably feeling a bit concerned when it comes to the state reform’s impact on company revenue. Several cities and states across the U.S. have been pushing an increase for the minimum hourly wage standard. Michigan is listed as one of these areas, raising the state minimum hourly rate from $8.15 to $8.50 beginning January 1, 2016. Business owners with a larger percentage of staff working at a minimum rate will have to make adjustments to replace revenue due to the unplanned costs. So what are some ways to achieve this?
Line Up Your Expenses
In order to understand the effects of the wage increase, you will need to first analyze your financial situation as it stands currently for your company. Determine your revenues and profits with your company expenses as well. Once you’ve figured out how your cash flow works, you would then be able to architect a hiring plan that you can afford. You might find that by recruiting freelance workers or contractors you save on labor costs as opposed to having a full time staff. You may also find that you company will be financially set for the payroll increase and no drastic changes will need to be made.
Raise Your Pricing
Perhaps the most common method for compensating for a mass employee wage increase is to raise your prices on your products or services to increase company profit. Realize your customers will not exactly be thrilled with the change, but that competitors will probably have to make the same move equaling a smaller risk level for losing customers and decreasing sales. Make sure to watch price trends over the next few months to know if you are missing out on potential revenue or offering your product or services for too much.
Automate Your Processes
Minimizing workload in certain areas of day to day functions will leave more time for your employees to dedicate to other important processes that require extra focus and attention. To do this you can pool managers and other key employees together to find the best ways to condense some of your processes into shorter, practical routines that will require fewer hands needed or sign-offs for approval. Another action to take is to purchase software or other technology that will assist in automating more tedious processes. The logic behind spending money on software is that it will set more time aside for your employees to complete immediate and more prevalent tasks related to your business.
If you are a business owner in Michigan and are gearing up for the minimum wage change in the New Year, hopefully you take the time to evaluate best practices for implementing the increase. Follow the tips above so your business is in a better place to handle any hardships that may come your way.