By Thad Plumley
There is no positive way to spin “It might get worse before it gets better.” It ranks right up there with a wife telling you, “Don’t make any plans for Saturday.”
You know you’re in trouble.
So, when economists are already saying that our nation’s economy might worsen before it improves, you need to be prepared.
“Inflation” is also being mentioned regularly by the experts when they are asked to speculate about what to expect in the first part of 2022. Another made-for-television word that has come up is “stagflation,” a state when rising prices are combined with stagnant or little growth.
At the end of the day, none of it is good. Even the most optimistic person can’t put a happy face on it.
So, what are you doing?
I know many of you have been as busy as ever this year. The supply chain delays and hiring woes have created issues, but like you always do, you have figured out workarounds. I have heard about busy work logs stretching weeks and even months for many of you. This is awesome news, especially after the COVID-19 coronavirus pandemic threw 2020 a major curve!
I hope, though, you aren’t so busy you’re not preparing for what is to come. Now is the time to be in your office, door closed, calculator in hand, crunching numbers.
As a small business owner, you should always be concerned about inflation. And there are four steps I think you need to take to prepare for it when all signs are inflation is indeed on the horizon.
The first is evaluate your revenue streams. If inflation will most likely slow the need or want for your products and services, you need to make adjustments to your revenue forecasts. Ask yourself this and answer honestly: Are your offerings diversified enough to withstand prolonged inflation?
The second thing you need to do is reduce your costs whenever and wherever you can. Hope that it will increase your profit margin; know in the least that it will minimize your losses.
Then think about borrowing. The time to borrow is always before interest rates start to rise. Consider borrowing for things that will help you control costs or increase your revenue streams.
Finally, think about your customers. Do you have any type of program that locks them in to you? I have preached the importance of having maintenance agreements with customers for years, and they are critical in times of inflation.
Maintenance agreements prevent customers from being tempted to price shop if a repair situation for their water system arises. The revenue generated from the annual fees is a bonus that can help in the lean times too.
No one ever wants to hear about things getting worse, but it’s critical you’re prepared for when the better days ahead finally arrive.
Thad Plumley is the editor of WWJ and director of information products at the National Ground Water Association. He can be reached at email@example.com, or (800) 551-7379, ext. 1594.