Inflation is nothing more than a market reaction to excess general liquidity, manifested in a general rise in consumer prices, mainly in basic necessities and mass consumption.
Now, before talking about how to deal with this, it is necessary to identify how this affects me as a company?
A rise in general prices (“Inflation”) has different effects depending on the type of business you have; from the increase in the cost of raw materials for the manufacture of products to the nonconformity and low productivity of employees when working because their salary is not enough to cover their needs or lifestyles.
And how to deal with inflation from my company?
Surely you will think that there is not much you can do, but the truth is that yes, a collective reaction is the only thing that can contribute to control it, and this translates into what governments are trying to do with the rise in interest rates. interest: Prevent the consumer from spending more than necessary!
Yes, that is the key to controlling inflation: Stop spending unnecessarily!
Normally, what increases disproportionately in price are those things that are not “necessary”, the so-called “luxuries” or “whims”. For this reason and for the financial health of your company, we invite you to exhaustively review the unnecessary expenses that your company has. so far and root them out so you can:
- Acquire your products from suppliers with the increase without being affected in the cash flow.
- Try to transfer in a smaller proportion the percentage of the acquisition cost overrun to your final product or service.
- Compensate your work team in times of crisis so they don’t feel demotivated.
- Improve the financial health of your company on the eve of a recession.
These are some recommendations that millionaires like Warren Buffett suggest when investing in companies in times of crisis:
- Invest in companies that can transfer that inflation to the final product without affecting their sales volume.
- Invest in companies where the cost of production and administrative expenses are separated from the capacity to generate income (Technology).
So, you already know how to deal with inflation from your company.
Remember that at Efinti, we have only one path for your company: Grow without borders!