5 Tips for Small Businesses to Adapt to the Arizona Minimum Wage Increase

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If you are an Arizona business owner, odds are you are all too familiar with Proposition 206, the Fair Wages and Healthy Families Act approved by voters back in 2016. And while the proposition has been in  effect for over a year, the phased-in nature of the Arizona minimum wage increase dictated by the law mean that business owners have to adjust to new wage standards on an annual basis until at least 2020. So what can Arizona businesses do to adapt now that the state’s minimum wage is $10.50 per hour? Here are some ideas.

Arizona Minimum Wage Increase 2018

Whether you employ five employees or 500, the Arizona minimum wage increase of $10 to $10.50 in 2018 can have huge implications for your business. What can business owners do to maintain the profitability of their businesses and remain in compliance with Prop. 206?

arizona minimum wage increase

Be strategic when hiring employees

Whenever you are hiring people to work at your business, you probably already look for the candidate who you think will do the best job. But, do you consider factors like the expected length of employment? Even in the most high-turnover industries, the process of replacing a worker after they quit usually costs businesses thousands of dollars. When you hire a new employee, make this one of your considerations. And in addition to anticipating a candidate’s potential longevity, make it incumbent on yourself to create a positive working environment to ensure a higher level of employee retention.

Increase your productivity

Furthermore, think of ways workers’ productivity can be increased. Having a positive work environment plays the dual role of increasing retention and productivity. What else can you do? Could side work be broken up differently to accommodate fewer people on the work schedule? Are there some small incentives you can offer workers to meet certain productivity goals? You would be surprised at how much seemingly small tweaks can impact bottom lines. In other instances, a larger investment in specific training or equipment may be the appropriate way to increase productivity. The ways you will go about increasing productivity will be highly dependent on your business and your business model.

Cut the fat

Further, look at ways you can further enhance the company’s productivity by reducing costs and making every dollar count where possible. For instance, assess the amount of square footage you are using and if you could still conduct your business with a reduced footprint and cheaper rent payment to make every month. Assess your agreements with vendors and seek out quotes from their competitors on a fairly regular basis to ensure you are not missing out on some other potential savings.

arizona minimum wage increase

If worse comes to worse, it may be that you also need to consider reductions in staff to absorb the costs of Arizona’s increased minimum wage.

Streamline offerings

How many products does your company offer? Would it be worth considering eliminating some of those offerings to focus only on those that are most profitable? Perhaps. Depending on the business you are in and what motivates your customers, you may find that simplifying can not only increase your efficiency, but it may also increase your sales because you eliminate customer confusion and make it easier to do business with you.

Researchers at Columbia University conducted a study that suggests too many choices can have a real negative impact on business. When study participants had 6 brands of jams and chocolates to choose from instead of 24-30 brands in the other study group, they were 30 percent more likely to make a purchase than their counterparts.

Raise your prices

When was the last time you raised the price of your products or services? If you think the market will bear it, this can often be the cleanest and quickest way to adapt to increasing minimum wages. However, pay careful attention to the books and do some analysis to ensure that the benefits outweigh the costs. How will the Arizona minimum wage increase affect your sales volume? You overall profit margin?

If you are unsure of how to do this kind of analysis or need some guidance with any of the elements mentioned in this article, be sure to look us up. We have helped business owners in numerous industries with some of their trickiest scenarios and have not been stumped yet. Before you do anything drastic like let go of staff or cut off relationships with vendors, let’s meet up to go over your books. Is there some extra money hiding somewhere in your business? Let us take a look and help you find it! Click here to contact us


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