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Inflation is here - what can business owners do?
There are many business disadvantages to getting old …. but there are one or two compensating advantages.
One of these is that you recognise the following old truths:
- “there’s nothing new under the sun” …. and that
- “what goes around, comes around”.
I was already in business in the 1970s - pause for cries of “no, surely you were still in primary school?” to die down- albeit as a trainee accountant (or “articled clerk” as they were called in those dim and distant days).
This reached crisis proportions – by 1975 inflation reached nearly 25% pa, and Bank Rate was 17% (meaning that loan interest rates were well north of 20%). This had massive, and far-reaching, consequences (leading to the collapse of many businesses). You needed at least two pay rises a year (just to keep pace); recruitment was a nightmare; property prices rocketed: and financial reporting became close to being meaningless.
A cynic (i.e. what an idealist calls a realist) once said that major financial crises happen only when those who remember the last one have all retired – and it’s certainly true that when the wise men in the City say “it’ll be different this time round” it’s a good idea to run for the hills ….
The CPI has just reached 5% and is still rising – and the RPI is now 7.8%. Furthermore, in many industries the actual inflation figure applying to raw materials and other costs is far higher.
We’re still a long way from the crisis conditions of 1975 (and the wise men say this is just a blip) – but a lot of business owners and managers have become used to very low rates of inflation, and may not have seen these conditions before.
What to do about inflation in 2022?
Here are six tips to start with …..
1. Don't panic!
As The Hitch-Hiker’s Guide to the Galaxy (or, if you prefer, Corporal Jones) says – “Don’t Panic!”. This too shall pass.
2. Stay flexible
The SME business person has a large advantage in a rapidly changing world – it’s much easier to change course quickly. Here are some examples of how business owners pivoted and adapted during the pandemic. Such flexibility needs to be adopted by business owners during inflation too.
3. Have a plan
Revisit it frequently, and don’t be afraid to change course. Download our guide on four tips for strategic planning.
4. Look after your staff
This means not only paying competitive salaries but taking an interest in their motivation and welfare. Recruitment is already very difficult, and the last thing you want is to lose good people and have to replace them. Here are fourteen tips to keep your staff motivated.
5. Seek advice
This might be from friends, family, your business network, or elsewhere. But what about other business owners like you? Just think how cool it would be to have a monthly meeting with six or seven other business owners (from non-competing industries) to share experience and hold each other accountable …. with a monthly 1:1 coaching session in between meetings. Find out more about what we do at TAB.
6. Look after yourself
Everything else depends on this. Like the advice you get on airliners – “make sure you put your own oxygen mask on before helping others”. Here are some tips on how to have the perfect day. It’s vital to get plenty of sleep and exercise and to regulate your screen time (especially agonising over international and domestic political crises you can do nothing to influence).Related articles
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