Inflation can be a positive or negative factor for businesses, but it can also present opportunities for growth and innovation. Some business owners have already capitalized on inflation positives to update inventory values, take advantage of reduced mortgage rates, or make price increases. Others have restructured their businesses for the future, eliminating marginal processes and finding new growth partners. To make the current inflation economy less negative, business leaders can adopt the following strategies:
1. Solicit follow-on revenue from existing customers. This involves using digital channels, personalized promotions, and ongoing efforts to keep customers coming back. Showing appreciation with a “thank you” for the business every time and offering a reward for referrals and doing things together in the community.
2. Respond to new market shifts and opportunities. The recent inflation has made customers rethink their spending habits and needs, and businesses can benefit from new services or expanded product lines. Expanding online, using platforms like Amazon or opening new stores in a growth community, and focusing on business model innovations that cut costs for customers can help.
3. Outsource functions outside your core competency. This can save money by reducing travel, translation, and communication costs associated with remote work. Utilizing Zoom and similar video tools can be a valuable tool for remote employees.
4. Run experiments on new sources of revenue. Customers may react positively to new repair or support services, rental capabilities, or subscription services during times of inflation. Sample one or more of these opportunities without a major investment, as seen in Amazon and Jeff Bezos.
5. Replace marginal performers with new top talent. The recent downsizing at nearby companies means more highly skilled employees on the market, so businesses can trade up and gain in productivity. Attracting the right talent and using the right incentives has been shown to dramatically increase productivity. New generations of workers are motivated by different incentives, including culture, flexible schedules, and constant feedback.
In conclusion, while inflation can be a challenge for businesses, it is essential to look for positives rather than focusing on the negatives. Running a business is about maximizing satisfaction and financial returns, so it’s crucial to make it a win on all fronts.
By: Martin Zwilling
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