Year over year price inflation is something like 7/5%, depending on what your mix of costs are. OK, we’re gonna point out some things you can do to not only whip inflation but expand your business at the same time.
These things work, too. I’ve done them.
First, figure out what your competitors are doing. Odds are they’re raising their prices, but you need to know, because it will to some extent dictate your strategy. Most businesses will raise prices because their owners and management are lazy.
You’re not lazy.
So, if you observe the dicta I’m laying out, you might even cut prices.
Second, start producing or ordering in larger quantities if you can. Given supply chain problems, this might not work, but order more where you can. Most suppliers will give you a price break, even now.
If you’re a manufacturer, produce more; your unit costs will go down because of more amortization of fixed costs, even if your variable costs, e.g., labor and raw materials, don’t go down. If the variables go down, so much the better.
Third, don’t run yourself out of money while you’re ordering or producing more, either. Talk to your banker, tell him or her what you want to do, and they’ll probably be accommodative. You might need an increase in your credit line. If you get static, let us know. We know people.
A word about energy costs. It’s hard to predict if or when the Washington Wizards will open up our energy sources. Electricity is going up somewhat. Solar power might be an option but it’s capital intensive. Leases with options to buy might be available.
Your variable labor costs might go up due to wage inflation, but it’s not much if you’re increasing production. Add variable labor costs into your equation.
Fourth, you might find that you will need more distributors or retailers of your product but wake up your sales force and get them busy. Or go recruit some more manufacturer’s agents…they’re out there, and they’re usually hungry to take on new lines. You might even find some agents coming over from your competition.
If you do all of the above, you’ll not only whip inflation in your business, but you might also expand it.
If you want any help with any of this, log into our Zoom Room 819-907-3230, passcode solutionsf on Wednesdays at 4 pm MST and we’ll talk it over.