Inflation can reduce your purchasing power and frustrate your short- and long-term financial strategy. As of March 2022, inflation has reached 8.5%—the largest year-over-year jump since the 1980s. Businesses worldwide are reeling from the market conditions as the cost of goods rises and the labor industry increases wages. Companies need to pursue cost-cutting opportunities and adjust their prices to save money and weather the shifting state of the economy.
Now more than ever, small businesses may find it difficult to stake a lasting claim in their market. The economy is feeling pressure from both supply and demand, suffering from the bottlenecks and production slowdowns brought on by the COVID-19 pandemic.
Prioritizing your finances and establishing a sound inflation protection strategy is a unique challenge that requires careful research, planning, and discipline that may be too much to ask from an already overwhelmed business owner. But it isn’t impossible.
Keep reading to learn how to navigate the current economy and protect your money from inflation.
Why You Should Learn How To Cut Costs During Inflation
Supply chains are devastated, and production has slowed across many industries. Price increases have put a strain on commercial and consumer spending, and with no end in sight, it’s tough to tell when business owners will no longer need to fight tooth and nail to preserve their purchasing power and successfully move their goods and services.
This high-inflation period may have a significant impact on the oncoming recession. Companies need to take the time to adjust the prices of their goods and reinforce their financial strategies to endure the uncertain future.
According to a recent report by the U.S. Bureau of Labor Statistics, the Consumer Price Index rose for the 12 months ending in March. The increase represents the highest 12-month increase since 1981. The nature of this new inflationary environment is so different from the past that economists and financial specialists feel pressured to create and implement new procedures to meet the cost of doing business and survive the shift.
With the right tools and mindset, your organization can withstand the economic upheaval and, under the right circumstances, possibly even thrive. However, you must prepare to pivot and adapt. Here are a few tips to help you start saving and successfully navigate the financial landscape:
Smart Money Management Tips for Your Organization
Inflation and recession don’t need to spell disaster for your company. Here are a few essential tips to help you reframe and reconfigure your core business strategies:
Prioritize High-Value Goods and Services
Consider your most popular product. Meeting customer demand for your entire service suite may be infeasible in the current market conditions. Finding the workers you need to manufacture and deliver your goods and limited real estate availability are obstacles for organizations who need a warehouse, laboratory, or industrial space.
Rather than assign priority based on the date of the order, take profit margin into account. If the market for your product won’t accept a price hike, lower their delivery priority and promote a good or service that can survive a price increase and boost your product margin. Communicate to customers who order products with lower priority that the delivery will be slow and suggest higher-priority items to them.
Raise Your Prices
Many companies may feel hesitant to raise their prices. However, strategic price increases for your goods and services are a reliable way to prevent significant damage to your profit margins. Take a look at your offerings and raise prices slowly and only on the products that benefit your margins.
Get creative with your marketing. Reconsider how you communicate your services to customers and pitch how your services help them thrive in these troubling times. Remind them of your value, so they feel confident in their investment with you. Be transparent about the inflation’s impact on your services and run promotions to highlight your dedication to their success.
Navigating inflation is tricky when you don’t have a solid grip on your risk profile. InSource helps oil and gas industry organizations create risk management programs that match their goals.
Revise Your Business Operations
In addition to identifying your core services and promoting the ones with the highest ROI, evaluate your operations, investigate ways to improve your processes, and introduce new efficiencies. Invest in your workforce and offer staff the opportunity to learn new proficiencies. Set up training modules to improve their weaknesses and determine how they can contribute to your company’s productivity and profitability.
Make a Way Through Inflation With InSource Insurance Group
The market is sophisticated and constantly shifting. Finding a sure way forward can feel impossible without the proper support and resources. InSource Insurance Group LLC helps oil and gas exploration and service companies throughout the country navigate the financial landscape and offer the insurance they need to minimize risk and achieve their long- and short-term business objectives.
We offer robust insurance options like captives, self-insurance trusts, and large-deductible programs at competitive prices. Our team strives to help you mitigate and manage risks with insurance that covers losses when they occur. By applying our market relationships and comprehensive industry knowledge, we negotiate prices and terms that are compatible with your mission.
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