The state of the economy may feel dire at times, especially if you are a small business owner. However, business writer, consultant, and speaker Gene Marks says there is no need to panic. The barbarians have not breached the gate and Rome is not about to fall, he says metaphorically. So, there is no need to come to dire conclusions. And while these economic conditions my persist for the near future, there are a few steps you can take to keep yourself in black ink.
“If you’re running a business, then you need to be operating with the mindset that prices are going to continue to go 6% to 10% over the next 12 months,” Marks says. “You have to prepare yourself for that and take steps to protect yourself."
Marks offers three successful strategies he is seeing companies doing to navigate around inflation.
Raise Your Prices. Strategically. “You’d be crazy not to raise prices, particularly when you haven’t been able to do that over the last 15 years. What’s different now from [the inflation] of the late 1970s and early 80’s is business owners today have a lot more data. I’ve seen my clients raise prices, but they’re doing it very strategically. They’re not doing [increase of] 10 percent across the board. Instead, they’re digging into their accounting and customer relations management systems to target certain customers, certain product lines, certain regions … They’re really looking at this data. So, for some [clients], they’re bumping up prices a few percent points, and for other, not at all.”
Double Down On Communication. “I see a lot of clients leveraging their data for communicating, as well. They’re really segmenting their data and doubling down on communicating with their customers just to let them know about price increase and when it will impact them. They’re staying very close to customers so that they are well aware of what’s going on. And it works. It really keeps the relationships going well.”
Employ “Shrink-flation.” “I see my smarter clients practicing shrink-flation. It’s when you sell something for the same price, but you sell just a little bit less of it. This is going on all over the place. For example, your roll of paper towels may have a few less sheets, or there are a few less garbage bags in the box, or a hotel makes you request for maid service, it’s not just given. In other words, you can provide the same products or services, but just a little less and you keep the price the same … and it keeps the margins up.”