Top 10 Ways to Protect Business from Inflation

A business enterprise must retain its financial stability amidst rising prices and reduced purchasing ability. Aditya Verma, Founder & CEO of The Office Pass (TOP), the largest coworking operator in Delhi-NCR, lists below 10 ways to shield your business against inflation

Track and analyse economic indicators: These include the rate of inflation, currency fluctuation, and rate of interest. Understand the macroeconomic environment that would help predict possible inflationary pressures in the future and allow you to make informed business decisions.

Negotiate contracts in the long term: Work out long-term contracts with your vendors, suppliers, and other service providers to secure pricing that is favorable to you. Also, it would help protect the business against unforeseen inflation. Long-term agreements lend stability against short-term fluctuations from inflation.

Adjust your pricing: It is important to review and adjust your pricing strategies regularly. This helps prepare for inflation. Apply regular price-increase strategies in tune with the rate of inflation to maintain your profit margins and offset increasing costs.

Control costs and expenses: Conduct a comprehensive review of your business’ expenses and identify the areas where costs can be cut. Negotiate better terms with the vendors or explore alternative suppliers to reduce the effect of inflation.

Manage inventory effectively: It is the most crucial during inflation. Avoid piling excess stock to prevent your capital from getting stuck up in inventory, which may depreciate owing to inflation. Foresee and think of planning strategies to optimize your level of inventory and lower costs of carrying.

Look for more suppliers: When you depend on just one supplier, your business becomes vulnerable to pricing fluctuations. Work on diversifying your supplier base to leverage better negotiations and secure the best possible pricing for your product/service.

Explore alternative financing: Inflation is also related to increasing rates of interest. It is better to consider exploring alternative financing options from non-conventional sources or fixed-rate loans to shield your business against increased loan rates.

Focus on customer loyalty: Customer loyalty is of utmost importance during inflation. Invest in your relationships with your customers, openly convey to them the price rise, and focus on delivering exceptional service.

Work on automation and new technology: Using technology and automation can help improve efficiency, reduce costs, and streamline business operations. It also helps optimize productivity, make your business resilient to inflation, and reduce the scope for manual errors.

Always remain proactive in fighting inflation and monitoring the current economic conditions in the country to protect your business against it. Financial planning, effective risk management, and adaptability help mitigate the adverse effects of inflation on your business enterprise.
(Views are personal)