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CEO Tools Blog

Aug 2013 12-Seasons = Counter Inflation!

In August, the focus of 12-Seasons-of-Business is on some things we can do about inflation.  Despite our Government reporting little-to-no inflation, does anyone actually believe prices for gas, food, airline fares, everyday consumer products and services, plus fees everywhere have not increased during the past five years?  Why is it that a number of worker strikes and protests are occurring right now over the official minimum wage?  Could it be that on a relative basis, the buying power of the earned dollar has declined severely vis-à-vis purchased goods and services?  Here are some ideas to help with inflation:

1 – Understand whether and how inflation is impacting your business by watching the CPI and PPI as well as costs affecting your industry and in your own purchased materials, services and labor.

2 - Identify hedging opportunities within your supply chain; rationalize the "middle-man" where possible (to lower costs, increase value-added).

3 - Evaluate strategic price increase opportunities the way the airlines have (see our blog last month on 24 ways to increase price).

4 - Pro-act with pricing tactics every quarter (e.g., institute  a blind 1/2% per quarter automatic cost increase in your estimating system = about 2.2% per year to cover fundamental COLI).

5 - Arrange with suppliers to pay them sooner on a schedule in exchange for better price-terms from them.

And a bonus #6:  be ready for further inflation by improving your cash-and-borrowing situation now (since it could well become much more difficult to do so in the forecasted upcoming economic slowdown followed by a sizable business surge).

Once again, these ideas will hopefully benefit your business in the months and years ahead.

With very best regards,  Kraig