Businesses will need to build resiliency to combat the impacts of this disruptive period. Wage inflation will continue to see businesses paying more to find and retain talent. Higher supplier costs will drive a trickle-down spike in prices, which in turn squeezes the purchasing power of consumers. And profit margins and deal-making may also be affected.
Rising inflation may be a headache but doing business doesn’t have to be. Taking decisive action to strengthen your growth plan can help you deal with the pressures of an inflationary period. Here are six strategies to help you deal with the impacts.
Get a better grip on your cash flow
In times of inflationary pressure, it’s more important than ever to have a solid grasp of your financial situation. Understanding your cash flow and working capital needs should be an essential part of your plan. Do a financial modelling exercise to map out your situation. From there, you can look at various levers to improve your cash flow, including:
- extending payments to vendors
- tightening up invoicing and collection policies
- divesting underperforming divisions or assets
- prioritizing your resources in areas that are performing well
Reduce your tax burden
It may also be beneficial to speak with an advisor to look for ways to reduce your tax burden and take advantage of losses. If your company has experienced losses, there may be ways that you can utilize the losses to improve your tax situation. A qualified advisor can provide guidance on how to maximize your business’ tax efficiency. But don’t wait too long—some losses have an expiry date.
Reach out to your lenders
With interest rates expected to continue to rise, the cost of borrowing is set to follow. With this in mind, it may be wise to review your debt and future capital needs. No matter your situation, a proactive approach is the best approach. Reach out to your lenders sooner rather than later, particularly if you’re:
- considering an expansion or an investment in new technology
- looking to refinance existing debt
- assessing your ability to meet current debt obligations
Refresh your strategies to guide growth
Exceptional sales and marketing strategies are a must if you’re looking to grow your revenue—but what worked in the past may not work now. Well-designed plans must reflect the current landscape to attract new customers. The same can be said for your goals on pricing. Many businesses are already increasing prices to keep pace with their own rising costs—and this likely includes your competitors. The time is right for a bolder approach, so refresh your strategies to drive growth.
Embrace digital transformation
Is your technology providing you with the right information to make timely decisions? If you don’t have access to real-time data or if you need more visibility into your financial information, it may be time to upgrade. Consider implementing a digital platform such as a cloud accounting system, an enterprise resource planning (ERP) system, a warehouse management system (MHS), or a customer relationship management (CRM) system to empower your decision making and help you grow your business.
Align your operations
Needlessly complicated processes can break your bottom line regardless of the best intentions. If your people, processes or technology are working in silos, it may be time to transform your operations. Even small changes can make a big impact. Look for ways to simplify your processes to run leaner, reduce costs and increase profitability.
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