Inflation is on the rise--but that's not necessarily a bad thing for your business.
Data from the U.S. Bureau of Labor Statistics recently showed that inflation hit a 30-year peak in October, which means businesses have to find a way to make up for increased labor, transportation, and inventory costs, while customers have to contend with increased prices on their end. There are plenty of ways inflation is putting pressure on businesses, but there are some benefits to it as well.
Here three situations in which small companies can actually take advantage of this moment:
You can finally raise prices.
Even small businesses that might normally have to compete with larger retailers have been able raise prices, says John Carey, co-founder and vice president of appliance retailer Designer Appliances, recently told Inc. When businesses across the board experience cost increases, they all raise prices with little risk of losing customers. This can be good news for businesses that have held off on increasing prices until this moment: now they can compensate for increased costs and improve profit margins without threatening customer loyalty too much. As the Wall Street Journal recently reported, some industries have actually seen an improvement in their profits, in spite of inflation, like manufacturing, retail, and biotech. Designer Appliances, Carey says, has also enjoyed a boom in business, as consumer demand for home appliances holds strong.
Your inventory is worth more.
If you're one of the lucky businesses that had amassed large stores of products before the whole supply chain meltdown slammed the globe, you're sitting pretty right now, as you're likely able to sell your products for far more than you paid. But even those who didn't stock up can save. Bulk buying is a great tactic to guard against inflationary pressures--and it can actually help increase profit margins in the long-run, too. After all, prices rarely fall after they've increased, while costs could indeed come back down to earth.
Your debts just got cheaper.
Inflation is beneficial for borrowers: when the value of a dollar decreases but the amount of money you owe doesn't, paying it back gets a little easier. So, businesses with fixed rate mortgages and other loans may find it easier to tackle their debts. It might not be the best time to look into taking on a new mortgage, however. Interest rates are increasing again as a result of inflation, the Washington Post reported.