Our reality check is that today a gallon of gas averages $4.10— a whopping 49% more than the $2.75 in March 2021. If your small business has a fleet of cars or trucks, inflation at the pump can tear into profits.
With commodity prices rising, the cost of services will also rise. Businesses often have no choice but to pass along their increased cost of products and services to their customers. A rising tide raises all boats!
So how can a small business protect itself?
According to the Bureau of Labor, the Consumer Price Index (CPI), which measures changes in the prices paid by consumer for goods and services, had it largest 12-month increase since 1982. If you can, it may be wise to stock up on inventory, invest in property and update equipment before the CPI rises higher.
Now that the Federal Reserve Board has decided to increase the federal funds rate, those who anticipated higher rates and place their cash into interest-bearing CDs, money markets, bonds and savings accounts may benefit. The Fed today signaled multiple incremental increases during the coming year.
If you have access to capital, it may be a good time to purchase inventory and the core materials needed for your business. Examine your technology needs. You may be able to do more with fewer people using state-of-the-art automation that requires less human interaction.
If eligible, look into a fixed-rate loan from the SBA (Small Business Administration) for working capital and to refinance any existing debt on your business.
Talk to your suppliers about long-term agreements and if you rent business space, consider negotiating a longer-term lease.
Finally, talk to us as well as your financial advisor. Whatever the nature of your small business, the worldwide pandemic followed by Russia’s invasion of Ukraine are reasons to prepare.
As the crisis in Ukraine continues, people here in the Tri-State offer help to those who need to leave their homes. Read about the Matthew 25: Ministry program and consider a generous donation for drop off at their location at 11083 Kenwood Road, 45242.