A Few Counter-Inflation Strategies For SMEs…
To combat the consequences of double-digit inflation, most business owners choose a variety of strategies.
Here are some of the most common methods…
📌 INCREASE PRICES
First and foremost, the obvious. All else being equal, a rise in pricing should result in a disproportionate percentage increase in your bottom line. It goes without saying that you must be smart about charging higher prices and strike the correct balance between profitability and price sensitivity.
📌 AUTOMATE TO SAVE MONEY
Whether we like it or not, the global economy is now in the midst of a significant transformation. The shift away from human capital and towards automation, is occurring in unexpected places. Let’s face it: your capacity to cut costs has an impact on your prices and can ultimately determine whether you drown or swim. However, very few businesses are currently unaffected by labour shortages, which are causing bottlenecks and driving up expenses. Automation can assist in overcoming this difficulty.
📌 STOP PROVIDING DISCOUNTS
Many companies have realized the harm that discounts may do in an inflationary atmosphere. Concentrate on profit rather than more sales for the sake of it.
📌 CONTRACTS SHOULD BE FLEXIBLE
Contracts are a great instrument for combating inflation. Contracts can assist firms in securing pricing. Similarly, they may provide you with freedom while not tying you to undeliverable promises. It’s easier to resolve this upfront than to try to renegotiate afterward.
📌 LOOK FOR OTHER SUPPLIERS
There is a greater unwillingness to consider alternatives here than virtually anyplace else. Inertia, loyalty, and procrastination are all factors that might come into play. There may be dangers and short-term expenses connected with switching, but you can always test the waters first.
📌 INVENTORY CAN BE USED AS A HEDGE
Not for every type of business, but many are looking for methods to boost their present inventory or secure future supplies at current prices while they can.
📌 THINK TWO STEPS FORWARD
When inflation is in the double digits, it is even more critical to double down on cash flow estimates and take immediate action ahead of time. Nobody knows how long such high inflation will last. There are several guesses, but no one knows for certain. So now is a good time to look ahead a few steps.
