Managing rising costs and profitability

QUESTION: I own a services business in Jamaica in a competitive space. I am centrally located. However, my landlord just notified me that the rent will increase, come January. Things are going up in price, so I can tell already that 2026 will bring more pressure (pay for my workers, light, supplies, change out some equipment, and so forth). How should I tackle a business plan now? Because, last time we increased, the customers were bawling.

– Concerned owner

BUSINESSWISE: It’s good that you are being proactive, planning for the new year early in the fourth quarter. The fact is, your clients will expect the same or better quality of service in 2026, while, behind the scenes, salaries, rent, supplies, utilities and other operational costs will be climbing.

As a principle, your guide must be this: any business that you must subsidise from your own pocket is a business not worth keeping open. You either plan to stay profitable or risk impoverishing yourself. Here are the main factors for you to consider when formulating your budget and adjusting prices accordingly.

Negotiate rent increase

Like many other small service businesses in Jamaica, rent is your largest fixed expense after salaries. Don’t just accept your landlord’s notice of double-digit increase - you have to negotiate. Remember that such a huge jump in January can devastate cash flow, especially because January and February are traditionally slow months for your industry. Instead, ask your landlord for two concessions:

1. A smaller increase: leverage your case in loyalty, track record, and the cost to the landlord of finding and fitting out a new tenant.

2. Delayed implementation: request that any increase take effect in March or April 2026, once business begins to recover from the slow season. This gives you a cushion to rebuild revenue and prepare your clients for adjusted pricing.

Budget for wage increases beyond minimum wage bump

As of June 1, 2025, the minimum wage moved by almost seven per cent from $15,000 to $16,000 for a 40-hour workweek. However, more increases must be anticipated based on the Jamaica Labour Party’s election promises. The impact will be broader than bumping up the pay of your lowest-paid worker.

When your support staff, security services, contractors, cleaners, or part-time workers demand higher pay, the cost of every component of your service rises, such as transportation, third-party services and supplies. Therefore, in your 2026 budget, assume another 12 per cent to 15 per cent direct inflationary pressure on wage-related costs as ripple effects.

You can also run the numbers for a ‘wage shock test’, where you estimate a 10 per cent jump in wages across your operations and see whether your profit margins survive. This is a good time to prioritise efficiency by eliminating duplication and automating, where possible, to lower labour dependence.

Pay yourself what you are worth

I can’t tell you how often I have to stress to entrepreneurs the importance of assessing and benchmarking the cost of their own skill sets. Your leadership, energy, strategic thinking, and execution are the most important capital for your business. If your own pay falls behind cost of living, you will burn out, steal from your future, and hurt business growth.

Like anyone else, poorly compensated people will not thrive. Therefore, your new budget and pricing must build in an owner’s compensation line that adjusts at least with inflation, and ideally beyond.

Reinvestment is a necessity, not a luxury

In any service business, the clients judge you on perceived quality and value. Take the time to ask yourself. How can you improve in 2026? Outdated equipment, a shabby, run-down space, limited automation, et cetera, will all send a negative signal to customers. It tells them that you are on the decline.

If you don’t reinvest, your value proposition will diminish. So, budget for upgraded tools, technology systems, and space improvement. Fresh paint and new signage make a world of difference. The good news is you can use AI to generate new ideas and images of your existing space, on a budget.

Include contingencies for external shocks

Jamaica is vulnerable to swings in exchange rates, geopolitical risks, global input cost changes, and energy volatility. I’m not sure how much of your expenses are exposed to exchange rate risk, however, a certainty is that electricity costs will fluctuate, and usually upwards. This must be included in your budget.

Cut losing services

It is critical that you stop offering uncompetitive services. In other words, if it does not make substantial profit, you don’t have to keep doing it. In 2026, ensure that every service must either contribute to the bottom line or end. Set new break-even thresholds for each service, and a revenue target. Where you consistently fail to meet target, either rework it or stop it.

Smart communication

Finally, once your new budget is prepared, you can phase the related increases. For example, raise prices for new clients or contracts first, then for renewals. Or offer older pricing for clients who commit to 12-month contracts; apply new prices to month-to-month or flexible arrangements.

Your clients respond better when they see what the increase is funding. So, ensure repairs and upgrades are completed and communicate how you serve them better.

In 2026, your strongest marketing message should not be ‘we didn’t raise as much as others’. It will be: ‘We’re building a better business to cater to your needs sustainably and never compromise quality’.

One love!

Yaneek Page is the programme lead for Market Entry USA, and a certified trainer in entrepreneurship.yaneek.page@gmail.com