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Inflation is posing challenges for local businesses

Economy-Jobs-Report hiring sign
Nam Y. Huh/AP
/
AP
A hiring sign is displayed in Wheeling, Ill., Thursday, May 5, 2022. (AP Photo/Nam Y. Huh)

How should Hawaiʻi’s small businesses cope with inflation? There’s a limit to what can be done — but there are some ideas.

With inflation running at levels not seen in 40 years, small businesses are getting hammered in every direction. Pacific Business News spoke to top small-business advisors to learn what their advice has been.

For example, there’s a lot of pressure to raise wages, both to attract talent during a labor shortage and to retain current employees who see their cost of living increase by the month.

However, with their own costs rising, that’s a challenge for small businesses.

Joseph Burns, Associate State Director of the Hawaiʻi Small Business Development Center, reminds clients that raises aren’t the only answer.

Bonuses and incentive programs tied to individual- or company-based performance are another option. These can reward success without permanently raising the company’s labor costs in every pay period.

Douglas Okamura, First Hawaiian Bank assistant vice president and business banker, reminds small businesses they can also reexamine their benefits packages to find affordable ways to give employees more support.

For example, financial education programs can be a cost-effective way to help employees with their own financial planning.

Another out-of-the-box idea is to give employees an equity share or ownership stake in the company so that when it does well, they do well.

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