5 Actions to Take Right Now to Survive a Minimum Wage Increase

So you’re operating a business in a place where the minimum wage has or is going up. You’re not happy about it, and you’re definitely not alone.
Just last week, the Los Angeles’ City Council voted to raise the city’s minimum wage to $15 per hour by 2020. It joins a growing number of cities that have or plan to increase the minimum wage. There are many cities, including New York, San Diego and Washington D.C. which are getting closer to raising theirs.
In fact, since the 2013 State of the Union address when the president called for an increase in the minimum wage, 17 states and six major cities have taken action. For the first time ever, more than half of the states in the U.S. have a higher minimum wage than the federal government’s $7.25 per hour rate.
Related: Los Angeles Becomes Latest U.S. City to Approve a $15 Minimum Wage
It’s not just cities and states. Many well-known companies from Walmart to Target are raising wages to attract the best people they can and, let’s admit it, for good PR.
Even if you don’t live in some of the regions mentioned above you may find yourself doing business with the federal government or companies such as Facebook, which are requiring vendors to increase their minimum wage (and provide paid time off) in order to do business with them.
So on top of tight margins and a slow economy you find yourself facing a minimum wage increase. What do you do? How do you respond? What actions do you take now?

1. For starters, don’t get emotional.

Like any government mandate (think healthcare) the worst thing you can do is let your emotions cloud your decision-making. The smartest business owners I know keep their emotions out of their businesses and make decisions based on the facts. And the fact is that your local, democratically elected leaders voted to increase the minimum wage (or a major customer is requiring you to pay your people more if you want to keep doing business with them).
You can try and change that during the next election cycle but these things are difficult to change once the ball is rolling. You can look for another major customer to replace the one you have but that isn’t so easy and will take time. So here’s what you do: you take a deep breath, put aside your anger, your frustration, even your panic, and start making decisions based on the facts.

2. Raise your prices.

Easier said than done? Of course it is. But you’re going to have to raise more revenues to compensate for the added cost. Hopefully you can also reduce some costs and make things more productive, but a price increase is going to be required. The theory is that your competitors, which are also likely paying minimum wage to some of their people, will be forced to do the same thing, so you should be on somewhat of an even playing field.
Because most of these rules take effect over a few years, you shouldn’t wait around. You should gradually increase your prices, where you can, to match your cost increases and implement these price increases as soon as you can. Read More