– a concern for most companies around the world.
Inflation is a decline in the purchasing power of currency. As long as there has been currency there has been inflation.
It has always been a good practice to match your pricing to the Producer Price Index (PPI – 2.4%). This ensures that you continue to receive roughly the same real monetary value for your goods/services.
They were forecasting 8.2% for April but the numbers came out yesterday and we’re at 8.5% – a 40 year high
Goldman Sachs survey: Goldman Sachs canvassed 328 CIOs and CFOs at insurance companies for the 2022 edition of its annual survey.
Over 60% of leading insurers expect the US to go into recession by 2025
They expect at least three rate hikes
74% say inflation will last for 2-5 years
85% of Small businesses are concerned about the impact of inflation
More than 2 in 3 businesses report having to raise prices to cope
Economist have hinted that the current trend could last for years. Instead of just raising prices look at this as a strategic opportunity…
- Evaluate current services and products – focus on quality vs quantity
- Prioritize the most profitable products/services – FOCUS
- Look at how you price and why – opt for pay as you use models – ala carte
- Reduce costs – where is the money being spent and by who – look for the higher ROI
- Manage cashflow
- Look to eliminate work – with labor shortages and increasing labor costs, where is the unnecessary work and what can be automated
- Forecast “what if” scenarios then ask: will you have enough cash, what are the preventative measures, what metrics do I watch to monitor these scenarios
- Transfer risks – what can you outsource
- Collections – fix collection issues now and don’t let others use your money to run their business
- Add a contingent workforce for flexibility
- Innovate! 2008 recession Apple released their new iPhone 3G, Amazon also launched new products and services. Starbuck came up with their online portal for customers
Notes from our Panel discussion:
WE ARE GOING TO FACE MAJOR HEAD WINDS
OUR PANEL TALKS ABOUT INFLATION AND STRATEGIES FOR BUSINESS
As we all have experienced our own pain with the increase cost in goods and services. Business have absorbed their own level of pain.
- More aggressive with financial assistance
- Hasn’t risen this fast in over 30 years
- Nursing shortages
- Corrections that will be passed to the consumers: premium or benefit increases
- Food and staff shortages
- They have a 2-year plan in place
- Can’t compromise service so need to be innovative
- Biggest challenge is getting the people (substitutes, teachers leaving…)
- Have made adjustments to pay
- Create a “place to live long and teach”
- Must be more intentional now more than ever with job fairs
- Mission to not compromise
- Biggest challenge is childcare and fuel costs (less and less cars in the parking lot)
- Face-to-face classes down 25%
- Online up 35%
- What is going to happen when technology replaces the people and skills?
- Are the businesses and education system looking at how to upskill and reskill?
- Keep employees happy (HOW? Other than increase pay)
- Create the culture through leadership. Education addressing these leadership skills instead of instead of standardized curriculum.
- Accountability: Leadership stop focusing on the 20% and pour in to the 80%.
- Change the mindset: not a one-and-done…continuous learning
- Showing a progression plan
- Restructuring for innovation to replace the staffing shortage.
- Adaptability: What is your market doing? What are your competitors doing?
- Communication: giving them realistic expectations about where “we” are and what we can do about it.
- Celebrating staff and successes. Initiatives
- As long as the cash flow can support it, expand your real estate footprint.
Warren Buffett is worth over $100 billion, his advice for businesses facing inflation: Invest in yourself and be the best at what you do.
The takeaway – leaders that adapt will run businesses that thrive.