What can businesses do to combat inflation?

After the past few years, all businesses want to do is focus on growth now as they haven't been able to during the height of the pandemic, but inflation is making that difficult. The rising inflation that we are seeing across all industries means that companies are really struggling with costs. And with the current labour shortages across an array of industries and serious supply and demand issues, these costs have come at a really bad time. So what can businesses do to combat the impact of rising inflation?

Take a look at current pricing

This is probably the first thing you look at when costs start to rise for your business. While this isn't what we always want to do, sometimes a price hike is necessary.

The question is, how much can you put the price up without angering your customers? On the customer side of things, we have seen insane, sky-rocketing prices from coffee to essentials like eggs and fuel. These high prices can drive consumers to change their habits, likely temporarily, but sometimes permanently. It’s about finding that balance between causing your consumers a lot of money strain and experiencing too much strain yourself. 

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There are a couple of ways you can get around inflation with pricing changes and without frustrating your customers too much. You might want to try:

• Raising prices a small amount, more frequently - rather than a huge jump in prices now (which can be quite daunting to customers) perhaps raising them a smaller amount in more frequent increments can be easier to take.
• Raise your prices now, drop them again later - with an end in sight, your customers might be happier to take a larger price hike on the chin now. 
• Reducing product size - we see companies like Cadbury do this every so often and is better perceived to customers than a price increase. 
• Introduce a new pricing model - inflation might show you that your current pricing model needs to be a thing of the past.

Consider alternatives to large wage increases

We all want the best talent, and it’s a fair estimate to say that most businesses are hiring either now or plan to very soon. In times of inflation, you might not have the same crazy amounts of money to throw at talent that other companies do, so you may need to look at other employee benefits. 

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There are many other things that can get quality team members in the door. Some great incentives other than really high wages may include:

• Flexible working arrangements
• More paid leave
• Opportunities for staff development
• Career development opportunities

Those are some low/no cost benefits that can be an extremely exciting draw for quality talent who are motivated by more than just money. 

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Rethink your suppliers and contracts

Most of the time, there are going to be a lot of alternatives out there (and it never hurts to look right?) Remember this: even the smallest savings can make a big difference! Just putting the feelers out for other alternatives can give you a bit of power to negotiate those prices down if your existing providers don’t want to lose you. 

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If you’re heavily reliant on single suppliers or overseas suppliers with really long lead times, you might find you haven’t got a particularly inflation-proof businesses. So again, getting out and looking for other suppliers can really help you when the costs of doing business are on the rise.

Analyse productivity

A great way to reduce your costs and minimise the impact of inflation is by doing more with less. Even really smart, lean businesses can find themselves with quite a bit of waste (whether that be in the form of time, money, resources, etc.). So it is wise to look over your business and see if there are any areas where processes could be streamlined and automated to function more effectively. 

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You’ll also want to see how you and your employees are spending your time each day. Is there room for improvements there? You might find here that there are a lot of time-wasting daily tasks that could be either cut out completely or much more effectively done using different systems. 

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Essentially, ask yourself this: where is the waste?

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Inflation affects businesses small and large. Rising costs really test how smart businesses can be with how they do things, how they spend their money and how they can pivot aspects of their business. Inflation doesn’t last forever, but remember that the changes you make now, will have a future effect.