How your business can handle inflation
If you’ve been paying attention to gas prices this year, it’s clear that the economy is currently trending toward inflation. As of summer 2022, 93% of Americans consider inflation to be one of the biggest problems facing the country. Disruptions to the availability of and demand for resources throughout the COVID-19 pandemic have severely hindered a supply chain that functioned by producing items after they had been paid for to be sent out “just in time” for consumption.
Though not all businesses feel the same effects of inflation, business owners across the country are worried about how the toll high inflation could take on their livelihood. With inflation can come increases in material and manufacturing costs, reduced profits and revenue, and difficulties qualifying for loans. You may be wondering how your business can handle inflation and, if so, what changes need to be implemented to make it happen? Should you raise prices? How can you reevaluate your supply chain to raise cost efficiency? Here are our expert suggestions for weathering the storm that inflation can bring your way.
What’s best for your business
When it comes to how your business can handle inflation, the first thing you need to do is evaluate your strengths and weaknesses. Investigate your product and revenue mix to determine what your most profitable products are or if any are underperforming. Consider cutting products with low profit margins to allocate more money and resources towards those with higher margins. If you can cull any other non-essential expenses, now would be the time to do that as well.
The one strategy that seems to make businesses most nervous is raising prices. While not every business will need to increase prices to stay afloat, if making cuts doesn’t do the trick it may be time to revisit your pricing strategy. If you have low competition and high brand awareness, raising prices is less likely to hurt your customer base. Effective market research can also help you identify the risks and rewards of raising your prices.
Need more guidance?
If you have questions and concerns about how your business can handle inflation, fortunately you don’t have to figure it out all on your own. There are a variety of consulting and accounting services for businesses that can take a look at your books and help you make decisions to strengthen your business. At GYL we offer a full range of business advisory services for everyone from big corporations to individuals and non-profits. Visit our website today to schedule a free consultation and start preparing your business to survive the economic landscape ahead.