​How Can Your Business Navigate Inflation and Wage Increases?

​How Can Your Business Navigate Inflation and Wage Increases?

01/28/2022 Tags: Announcements, In the News


It’s rarely easy to run a business — large or small. But inflation and staffing volatility are making the everyday process of running an organization that much more challenging.

Unfortunately, there are rarely easy answers or solutions in situations like this. However, you can take steps to try to mitigate some of the effects of inflation and wage increases.

To help you figure out the best steps for your business and its unique situation, we pulled together some resources from around the web. They’re not necessarily a comprehensive plan, but hopefully, you’ll find an idea you hadn’t considered before.

None of these tips are meant to take the place of financial advice from a professional. And if you find yourself in need of more assistance, please reach out to us to see how we can help.

HARVARD BUSINESS REVIEW — “6 STRATEGIES TO HELP YOUR COMPANY WEATHER INFLATION”

  • The Gist: Although the article was written before the worst of inflation took hold, there’s still some good advice about getting a handle on where you’re spending money and the kind of spending you’re doing.

According to the article’s authors, it’s tempting to make “broad-based” cuts. But that kind of approach can hurt your business in the long run.

Take a hard, in-depth look at where you’re spending money and differentiate between strategic and nonstrategic spending, they recommend. Don’t cut costs that could hurt your customers’ or employees’ experiences down the road.

When it comes to costs, look at what’s driving your expenses. “Dissect the rate (prices paid) and consumption (quantity or volume), including the underlying drivers, for critical cost categories,” the authors recommend.

Also, take a hard look at the work you’re doing and the services you’re offering. According to the authors, companies need to “scrutinize both what activities are performed and how those activities are performed, with specific levers to eliminate unnecessary work and automate.”

What adds the most value to your business? What’s absolutely necessary? Can you automate any of your processes? (Side note: Talk to us to see if our Organization Optimization team can help your business be more efficient.)

THE PHILADELPHIA INQUIRER — “7 WAYS TO PROTECT YOUR SMALL BUSINESS FROM INFLATION”

  • The Gist: As the article author, Gene Marks, notes, interest rates are likely going up this year. He recommends putting any extra cash into “interest-bearing certificates of deposit, money market and savings accounts, and even some bond funds because the earnings will start to make a difference.”

Also, before rates go up, it’s a good time to refinance your debt. “Pay down your variable, high-interest credit card debt,” Marks says, “or shift the balance to cards that offer lower rates. Better yet, refinance this debt into a longer-term loan with lower, fixed interest rates …”

You should also examine whatever investments you have, whether that’s “various stock, bond, and other asset accounts. Now’s the time to talk to your financial adviser.”

Marks recommends that business owners are strategic when it comes to price increases. “Avoid those across-the-board price increases and instead target your price increases on specific product lines where your margins are most affected and where customers are most likely to be amenable,” he writes.

And when it comes to your suppliers, talk to them about locking in long-term agreements if they’re willing.

CFO SHARE BLOG — “TOP 5 SMALL BUSINESS INFLATION STRATEGIES”

  • The Gist: This article was also written before inflation was as bad as it is right now. But there’re still some good ideas to consider.

According to the author, inflationary periods are a good time for businesses to “identity what differentiates you from the competition and lean into that product, service, and marketing message.”

Also, although it can be a risker proposition, according to the author, you could “consider your loan options before interest rates go up.”

If your business needs help navigating the current business climate, please let us know.

Image of John Mitchell



KEVIN EGGEBRAATEN

Shareholder and CPA



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