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Interest rates can have a direct impact on your small business’s performance and level of success. When interest rates are low, money is cheap and easy to borrow. High interest rates, in comparison, result in a higher borrowing cost. Here are five tips to help your small business survive during an era of high interest rates.

#1) Explore New Revenue Streams

Relying heavily on a single revenue stream can expose your business to significant risks during times of high interest rates. Consider diversifying your revenue streams to reduce your business’s reliance on any single particular market or customer segment. Explore new markets, products or services that can generate additional revenue and help offset increased the otherwise expensive borrowing costs associated with high interest rates.

#2) Prioritize High-Interest Debt Payment

Prioritizing loans and other forms of debt with a high interest rate can help your small business survive. Focus on paying down this debt before other, less-costly forms of debt. By making regular payments to high-interest debt, you can pay them off early. The sooner you pay them off, the less money you’ll have to pay in interest to the lender.

#3) Engage in Cost Control

Another tip to help your small business survive when interest rates are high is to engage in cost control. Review your business’s expenses and look for areas where you can cut costs without compromising the quality of your business’s products or services. Look for opportunities to streamline operations, negotiate more attractive terms with vendors and suppliers, and optimize your business’s pricing strategies to maintain profitability.

#4) Review Capital Expenditures

You should consider reviewing your business’s capital expenditures during times of high interest rates. Some purchases are essential to your business’s operations, meaning your business can’t survive without them. Other purchases, though, may or may not be essential. Delaying or prioritizing capital expenditures based on their potential impact on cash flow can help your business conserve cash and manage borrowing costs.

#5) Improve Customer Retention

What’s your business’s customer retention rate? Retaining existing customers is often more cost-effective than acquiring new ones. During times of high interest rates, focus on delivering value to your business’s existing customers and strengthening customer relationships. Provide excellent customer service, tailor your offerings to meet their needs and explore opportunities for upselling or cross-selling to maximize customer retention and loyalty.

Have anything else to add? Let us know in the comments section below!