Everyone is aware of higher prices, from pain at the pump to shock at the grocery store. Inflation is affecting consumers and business owners alike.
According to CNBC, inflation rose 8.2% in September. This means prices are 8.2% higher than they were a year ago. Of course, this is just an average, with prices for some items, such as certain food items, over 90% higher than they were a year ago.
What Inflation Means for Businesses
Depending on the type of business you run, you may be struggling with rising prices more or less than others.
Certain food items have gone up anywhere from 30% - 90%, while computers are actually around 3% cheaper than they were a year ago.
Still, every business is contending with rising costs of labor, energy, and fuel costs at the very least.
Don’t despair! There is something you can do about it.
How Businesses Can Combat Rising Inflation
Eliminate the Unnecessary
If you were reducing costs in your household budget a financial advisor would tell you to begin by identifying unnecessary costs. The same applies to your business.
Do you have subscription services you’re not using, or can you switch to something cheaper or free?
Are there unnecessary jobs or tasks you are still hiring someone to perform that could be eliminated?
The first step to dealing with rising costs is to do a thorough review of your expenses and see what you could reasonably eliminate or reduce to save money.
Focus on Productivity
Inflation means you’re spending more money on the same amount of goods and services.
Productivity is the opposite. Spending the same amount of money on more output.
According to a report put out by BDC (Business Development Bank of Canada), businesses that focus more on productivity are having an easier time dealing with inflation.
This may mean spending a bit more money in the short term. However, do this wisely. For example, if you can spend $200 training an employee to use a tool that will end up generating an extra $200 a month, this is a great use of your resources.
Outsource When it Makes Sense
While not always true, it usually makes more sense to outsource certain tasks to freelancers or other businesses than to hire someone to do it in-house.
A good example is marketing. Hiring a full-time marketer is usually much more expensive than simply hiring a marketing firm to run a campaign for you.
Think marketing is a good area to cut costs? Think again. One way to combat inflation is to bring in more business. Marketing is key to making this happen.
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These tips can help you not just survive but thrive in these inflationary times.
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