Inflation and actions for business owners

We all know the effect inflation is having on our personal spending power. Despite the Chancellors Spring Statement actions, it looks like spiralling inflation is not going away soon. The question is though, what actions can you take as a business owner?

Elasticity of supply and demand

It is safe to say that the pandemic created a perfect storm of high demand for products. This was a result of many factors including lack of supply, due to production standing still and supply lines stalled. The end result was obvious, price increases elasticity of supply and demand in the marketplace. This coupled with record low interest rates effectively created the high inflation we are experiencing. The Bank of England are predicting will reach over 7% by Spring 2022.

What can you do as a business owner?

You need to consider how inflation will impact your organisation from both an income and cost perspective, so we suggest you consider the below suggestions:

  • Have you looked at your sales prices to ensure you’re still able to achieve a sensible profit margin on your goods and/or services?
  • Do you need to look at increasing staff salaries to retain talent?
  • Have you updated your budgets and forecasts to account for increased costs?
  • Are there opportunities to expand or enhance the business in light of the economic shifts?
  • Have you reviewed your supply chain to ensure you’re receiving competitive rates?
  • Have you adjusted your business plan to account for these market forces to the macro environment?

It’s worth taking a good look at what your competitors are doing as part of your ongoing competitor analysis, but with a particular focus towards pricing and your target consumers ability to be able to afford your product or service.

What can we do to help?

Here at Carpenter Box, we are here to offer you advice to support your business through these unusual times. Please do not hesitate to contact us with any questions around this subject on 01903 234094.