How to protect your small business from the risk of inflation ?

How to protect your small business from the risk of inflation

The best thing to do in times of inflation is to be exceptionally good at something.

Warren Buffet in 2021

Make a plan for spending and supply chain diversification, keeping in mind that cash flow is the key to staying with supply chain diversification and keeping employees. These are the most important things you can do to fight inflation, and we'll tell you what they are:

Develop a spending strategy.

At the beginning of emerging projects, it is easy for every founder to slip into taking some spending risks. Some business owners are so enthusiastic about their work that setting a budget is the last thing they think about. If commitments are not defined accurately, it will be difficult to control expenses later. We see that the most successful Emerging companies are run by people who have two different ways of thinking: one is very dreamy, and the other is very money-minded. Here, confrontation will bring the company's management to a point of balance. When there is a storm of inflation, a clear strategy for financial performance must be made, and if there is something that can be left out, this is it. Good time.


Diversification in supply chains

Your business's supply chain operations may run into problems, like higher costs for materials, shortages of supplies, delivery delays, and, of course, higher shipping costs. At the start of your business or before these problems show up, you need to have more than one source of supplies. Relying on just one supplier will limit your choices. Make sure you always have the opportunity to find other good suppliers.


The priority is always cash flow.

Cash flow is the main source of money for any business, but for small businesses, it's even more important because being able to make promises to the main suppliers is key to the business's survival and growth. It will also help you take advantage of the best available opportunities, and in times of inflation, cash flow is a great challenge, so new ways must be found. innovative ways to speed up payments from customers, like bringing in a third party or putting more effort into marketing.


Maintain staff

You may see it at first glance as a strange element in our article, but believe me, gaining employee loyalty in these times of inflation is a capital that is stronger than cash in your bank accounts. Employees also feel the effects of inflation in their daily lives. If raising salaries is not the best solution, try to help them with their financial burdens in other ways, such as through incentives every period, increasing commissions on performance by a reasonable percentage, or even helping them with home insurance.


Summary

In this article, you will learn how to get rid of confusion during periods of inflation using proven scientific methods.

Last Update: Feb 27, 2023 / 12:19 AM

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