What’s the best way for a business to deal with inflation?30.01.2023
Good Morning – all our clients would now understand that inflation is a part of our economy and business life we need to manage. The following we know can help you. The best way to use the below “inflation hacks” is to go through and pick out 3 to 4 things that you can easily do or achieve in a couple of weeks. Make changes in your business, make the changes habits, and come back to this list for more.
You can also call your client coordinator and ask for help in implementing the “hacks”. There are members of our team versed in everything here.
Here are some ways a business can deal with inflation:
- Raise prices: This is the simplest way for a company to counteract inflation, but it can also impact demand for the product or service.
- Improve efficiency: By reducing costs, a business can offset the impact of inflation.
- Diversify: By spreading the business across multiple markets and products; a company can reduce its exposure to inflation in any area.
- Hedge: A business can use financial instruments such as futures contracts to hedge against inflation; for SMEs, that means buying materials (if you have the cash) when they are available and may be cheaper).
- Adapt products/services: A business can adjust its offerings to consider changes in costs and consumer demand due to inflation.
- Negotiate with suppliers: A business can negotiate better terms with suppliers to reduce the impact of inflation.
- Maintain strong cash flow: By maintaining strong cash flow, a business can weather the impact of inflation and be better positioned to make investments that can help it to grow.
What are the best ways to maintain a strong cash flow?
Here are some ways to maintain a strong cash flow:
- Invoice promptly: Ensure that invoices are sent out promptly, and payment terms are communicated.
- Monitor accounts receivable: Regularly monitor accounts receivable and follow up on overdue payments.
- Manage expenses: Keep expenses under control by regularly reviewing and adjusting budgets.
- Offer discounts for early payment: Encourage prompt payment by offering discounts for early settlement.
- Maintain a cash reserve: Maintaining a cash reserve can provide a cushion during lean periods.
- Diversify revenue streams: Diversifying revenue streams can help ensure a steady flow of income.
- Manage inventory: Minimize excess inventory and ensure that inventory levels are aligned with demand.
- Improve payment processes: Implement efficient payment processes, such as electronic payment systems, to reduce payment processing time.
- Negotiate payment terms: Negotiate favourable payment terms with suppliers and negotiate better terms with customers where possible.
What are the best ways to negotiate with suppliers?
Here are some ways to negotiate with suppliers:
- Build a relationship: Building a good relationship with suppliers can make negotiations more straightforward and more productive.
- Know your market: Understand the market and clearly understand the cost of goods and services you seek.
- Be transparent: Be transparent about your needs and expectations, and provide clear, honest and specific reasons for any changes you request.
- Seek multiple quotes: Obtain quotes from numerous suppliers to ensure a clear understanding of the market and increase your bargaining power.
- Consider the long-term: Focus on building a long-term relationship with your supplier rather than just getting the best deal in the short term.
- Be flexible: Be open to compromises and find mutually-beneficial solutions.
- Ask for discounts: Ask for bulk purchases or pay on time.
- Negotiate payment terms: Negotiate favourable payment terms that align with your cash flow.
- Review contracts regularly: Review contracts and renegotiate as necessary to ensure they remain fair and mutually beneficial.
In what ways can you diversify a business?
Here are some ways to diversify a business:
- Offer new products or services: Develop and launch new products or services to expand the company’s offerings.
- Enter new markets: Explore new markets and geographic locations to reach new customers and increase revenue. (Doesn’t just mean a move to Queensland – but I understand the attraction)
- Acquire complementary businesses: Acquiring complementary businesses can provide access to new customers, products, and technology. This could be simply finding new machinery – yes, there is an outlay, but what efficiencies does it bring?
- Develop partnerships: Develop strategic partnerships with other businesses to gain access to new customers, distribution channels, and technology.
- Expand into new channels: to reach new customers.
- Offer customization: Offer customization options for products and services to meet the needs of individual customers better.
- Develop new distribution channels: Explore new distribution channels to reach new customers, such as wholesalers or online marketplaces. For SME’s this also means starting a referral program with your current clients. Start by asking for a referral.
- Diversify revenue streams: Diversifying revenue streams, such as offering subscriptions or recurring revenue models, can provide a more stable revenue base.
- Invest in research and development: Research and development can lead to new product offerings and market opportunities. For SMEs, this means learning new stuff and being better at what you do.
How do you raise prices in a business
Here are some steps to raise prices in a business:
- Assess market conditions: Determine the current market conditions and whether a price increase is feasible.
- Consider costs: Review your expenses and ensure that your prices align with your cost structure.
- Communicate with customers: Consider communicating with your customers in advance to prepare them for the price increase and to gather feedback.
- Evaluate the competition: Evaluate competitors’ prices to determine if your prices align with the market.
- Determine the right amount: Determine the right amount for the price increase and ensure it is sufficient to cover your costs and provide a reasonable profit.
- Implement gradually: Consider implementing the price increase gradually, rather than all at once, to minimize any negative impact on demand.
- Monitor results: Regularly monitor the price increase results and adjust as necessary based on customer feedback and market conditions.
- Provide value: Make sure you are providing value to your customers and that the quality of your products or services justifies the price increase.
What ways does a business improve efficiencies?
Here are some ways for a business to improve efficiency:
- Automate processes: Automate repetitive and time-consuming tasks to save time and reduce errors.
- Streamline operations: Streamline operations by simplifying processes and removing redundancies.
- Invest in technology: Invest in technology, such as software and hardware, that can improve efficiency and productivity.
- Encourage teamwork: Encourage teamwork and collaboration among employees to improve communication and productivity.
- Provide training: Provide training and development opportunities to improve skills and knowledge.
- Implement project management methodologies: Implement project management methodologies, such as Agile or Lean, to improve efficiency and accountability.
- Set clear goals and expectations: Set clear goals and expectations for employees to help focus their efforts and prioritize tasks.
- Measure and track performance: Regularly measure and track performance to identify areas for improvement and to monitor progress.
- Encourage continuous improvement: Encourage a continuous improvement culture by encouraging employees to identify and suggest ways to improve processes.
Serviced by related company Fresh Number Pty Ltd