5 Ways Businesses Can Tackle Inflation

What had seemed like a temporary inflation problem, is starting to look like a longer-term concern due to global turmoil and rising consumer prices.

In addition to a lack of available workers and a sluggish supply chain, these issues are motivating many companies to take action. With rising food and energy prices around the world, it’s evident that inflation is here to stay.

Supply-chain-driven price rises are expected to last through the bulk of the year at the very least, according to economists and industry leaders.

However, some steps can be taken to improve a company’s financial standing. We’ve compiled five tips for executives who want to not only survive the current inflationary storm but thrive in the foreseeable future.

On a side note, we hope you are connected to reliable internet, such as Xfinity Internet, when you are reading these important tips.

Revise Your Pricing Policies

Raising pricing during times of economic uncertainty might be the difference between just making ends meet and being able to invest in the future.

You’ve probably already implemented a price increase during the last year or so. You shouldn’t feel restricted from experimenting with other pricing structures simply because you have already implemented one price increase. Get back to the books if you feel the need to revise your pricing strategy. 

Examining your cash flow statements, sales projections, and profit and loss statements is essential. Number crunching reveals the optimal price rise required to break even, as well as the profit-maximizing price increase. 

Changing your offerings is another option if you’d rather not increase your prices. This could mean going with a different, cheaper manufacturer whose output is of somewhat poorer quality, or it could mean cutting out a portion of a service to save money on labor and supplies.

Identify Strategic and Non-strategic Spending

Executives are more likely to make decisions that put the company’s long-term strategy at risk when operating in a very unstable environment.

It is typical practice for businesses to implement wide-ranging cuts that have little to do with the company’s strategy and, as a result, will not increase profitability or value for shareholders.

Strategic cost-cutting should be distinguished from non-strategic cost-cutting in numerous ways, including the protection of unique customer and employee experiences and compliance with fiduciary obligations.

Invest in things that will yield the most return on your money by using consistent, easy-to-access financials.

Managers need to know where they can cut back on spending and save money, where they can make targeted cuts to operating expenses to increase ROI, and where they can invest more in strategic capabilities to accelerate growth and produce distinguishing results.

When the economy is unstable, it puts a company in a stronger position to make strategic decisions about allocating limited resources in order to revitalize its approach and increase returns for its shareholders.

Invest in Automation

In today’s overpriced economy, every minute counts. When you invest in technology that streamlines your operations and alleviates common problems, you free up resources that may be put toward satisfying customers and expanding your bottom line. 

Although purchasing updated software may put a burden on your budget at first, you may end up with more money available after the fact.

Investing in technology tailored to your business not only helps cut down on downtime and delays, but also provides valuable data about your customers, sales, and stock levels, allowing you to focus on expansion rather than maintenance. 

Examine your company’s internal procedures and external systems that interact with customers to identify problem areas and potential solutions. Which processes go smoothly, and what tasks lead to difficulties? 

Next, think about where you want to take your company. Perhaps you are hoping to expand your consumer base into a different demographic, or you’d like to increase sales by 10% at your busiest time of year. The type of technology you require will depend on the challenges and priorities of your firm.

Reduce Manpower

Getting rid of the task itself has the biggest influence on worker shortages and rising labor costs. Successful businesses approach these problems with a “zero-based redesign” mentality, which involves starting from scratch. 

This method compels businesses to evaluate not just what they do, but also how they do it, identifying opportunities to streamline and automate mundane tasks.

With rising prices on the horizon, businesses of all stripes are taking stock of their operations in order to cut costs and reallocate scarce resources toward initiatives with the most potential for expansion.

There are numerous methods to do away with labor. In the first few months of the COVID-19 outbreak, all around the world, hotels were restricting housekeeping by making it a voluntary amenity.

Establish a Source of Passive Revenue

When money is tight, bringing in passive income can help maintain revenue and boost profitability.

Of course, passive income isn’t completely hands-off; rather, it requires significant preparation and planning, followed by ongoing monitoring and upkeep. However, the potential for additional earnings exists if you are skilled at this. 

Your goal should be to make something that can survive economic uncertainty while requiring minimal time and resources to maintain and that will excite and bring in new clients. Your firm’ current offers, target market, and available resources will all factor into your decision. 

All in All

While there is no foolproof method for combating inflation, there are multiple approaches worth exploring. Take time to think about ways to combat inflation if you’re concerned about the impact it could have on your firm. 

Companies like these and others like them are taking preventative measures by putting in place cost management systems that will allow them to make strategic investments and develop the resilience to weather the effects of rising inflation.

By taking proactive measures on offense and defense, businesses will be in a better position to surpass their less proactive rivals even when the volatility subsides.

Featured Image: Pexels @ nappy

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