5 strategies to face inflation

Without exception, inflation has effects on all operational aspects of a business. This economic phenomenon transcends industries and impacts every facet of a company, from costs to its final prices.

According to the International Monetary Fund, inflation is the increase in prices of goods and services in an economy during a specific period. When there is inflation, your money can buy fewer things than it used to buy before. For example, an item that previously cost $1 may increase to $1.10.

To deal with inflation in your business, it is essential to be proactive and take strategic measures, said Javier Billoch, regional director of the Small Business and Technology Development Center in San Juan. The following are five tactics the expert shared to cope with this economic phenomenon:

1. Evaluate pricing structure and inventory – Frequently conduct an in-depth cost and pricing analysis, rather than setting prices based solely on comparisons with competitors. Consider the cost of ingredients, labor, site rent, payroll, and loans. To avoid losses, you must calculate the appropriate price for your product or service according to the markup and immediately make a correction if there is any variation.
2. Enhance collections – Implement a collection system for all services offered. Avoid granting credit to clients since this can increase accounts receivable. Instead, establish a discount system to encourage timely payment. To achieve this, it is essential to designate a person who will be responsible for managing collections on a constant basis.
3. Reduce costs – Either weekly or monthly, closely examine all items on the income statement. Implement strategies to reduce costs. Consider energy efficiency, equipment renewal, cheaper suppliers that do not compromise quality, and adequate insurance at a lower price. Seek technology that can forecastdemand for work and optimize how you manage your human resources.
4. Prioritize customer service – Train and motivate your employees so they are well informed about your business’s products or services. Billoch said holding customer service workshops and analyzing which products sell best will help improve sales.
5. Diversify income sources – Consider selling other products that you don’t usually offer, and explore new sales channels such as online stores or delivery apps.

With these tips, you can face inflation and ensure your business’s continuity and profitability within this challenging economic context.

This commercial content was written and/or produced by the BrandStudio team for Popular.

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