As we prepare for one elections, economic uncertainty continues. Amid stubbornly high inflation, the Federal Reserve decided not to change interest rates at the May meeting, leaving them at a two-decade high. Whether rates will be lowered by the end of 2024 is uncertain.

Latest data shows that small business owners are feeling the effects of this inflation. Compared to just three months ago, 71% of the 1,259 small business owners surveyed say inflationary pressures have increased on their businesses, and 49% say they have had to raise the prices of their goods or services during that period.

For small businesses, the best course of action is to be disciplined but flexible Financial Management for the foreseeable future. In addition to high borrowing costs, small businesses will need to plan for continued inflation, high fuel prices fueled by geopolitical turmoil, and a tight labor market that will push up wages.

Connected: 4 key insights for running a high-performing business – even in the midst of economic uncertainty

Until the situation stabilizes, there are steps you, as a small business owner, can take to ensure financial stability and position yourself for growth.

Five steps to improve operational efficiency and control costs

Be disciplined. Manage labor costs, reduce inventories and keep some cash on hand for contingencies or to take advantage of an opportunity to pay off a high-interest loan if rates drop.

Debt review and restructuring. To prepare for the eventual lowering of interest rates, evaluate your current loans and lines of credit to look for refinancing or consolidation opportunities. Today is not a good time to lock in your rate for a long period. Stay flexible as rates will drop – it's just a matter of when.

Manage cash flow tightly. Many small businesses hate to push their customers for payment, but the impact of high receivables on cash flow can leave you starved for funds when you need them most. Cash flow management it becomes even more important during periods of high interest rates. Tighten or enforce credit terms with customers to ensure faster payments, negotiate longer payment terms with suppliers, maintain tight budget control, and draw lines of credit that provide cash against your receivables to cope with the ups and downs of your cash needs. Liquidity is a hedge against the financial strain of higher borrowing costs.

Cut unnecessary costs. Look for areas where costs can be reduced without affecting product or service quality. This may include renegotiating contracts with suppliers, using technology to improve efficiency and making appropriate use of office space.

Focus on customer retention. Depending on your industry, acquiring a new customer it costs five to 25 times more than maintaining an existing one. Studies have shown that a 5% increase in retention rates increases profits by 25% to 95%. Bonus services, loyalty programs and personalized communication are all cost-effective strategies to improve loyalty.

Connected: 4 key insights for running a high-performing business – even in the midst of economic uncertainty

Get the most out of your financing

Financing is more expensive in this environment, but that shouldn't stop you from getting the financing you need. Be flexible, creative and explore different options.

Look for alternative sources. Traditional bank loans are only one financing option. Specialized funding sources include asset-based lending, invoice factoring, grants, crowdfunding and angel investors. You can find in these specialized funding sources more favorable and flexible terms, greater access to money and enhanced capabilities to adapt to your business needs.

Avoid closing charges. They will come down eventually. If foreclosure is your only option, negotiate the shortest term possible. Variable rate loans are usually less expensive than fixed rates and you can refinance when your credit score improves.

Do not commit to repaying fines. You want to be able to move quickly to refinance debt as rates drop and market conditions become more competitive.

Choose a lender who is also a business partner. Traditional banks are often reluctant to do business with SMBs because they consider them a more significant risk than large enterprises. Non-bank lenders are less likely to suffer from this myopia. Many specialize in particular sectors and are happy to offer advice as well as funding. With a strong business plan, your lender can turn into your collaborative partner.

Keep your ear to the ground. Interest rates have been rising for the past few years and are likely to continue. Stay informed of economic trends and be ready to take advantage of changes in the financing landscape.

Unsecured environments like today's present the most significant challenges for small businesses. By being agile and strategic with your financial and operational management, your business will be stronger and more resilient in the long run.