Concerned about inflation? There are facts supporting the assertion that consumers will most likely be able to manage ongoing inflation and drive economic activity to new levels in 2022–23.
Want to see some of these facts? Let’s check out three of them:
- The labor market is still very tight.
- Debt-to-income ratios are very low.
- Leading indicators are signaling that supply chain issues and inflationary pressures will likely ease following the disruptions caused by the war and attendant sanctions.
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Don’t panic – plan ahead!
With these facts, you can begin to dispel your immediate fears and, in so doing, avoid any knee-jerk reactions that may have longer-term negative impacts on your business.
But what about longer-term fears? You’re most likely starting to hear rumbles of the coming next depression. There’s been talk of ongoing inflation throughout this decade. Government debts continue to rise, and their potential to become truly problematic is increasing.
Amongst all this, you are also likely being bombarded by terms such as:
- Silver tsunami
- Demand cliff
- Largest wealth transfer in history
How can one possibly find the confidence to build appropriate pricing strategies in a decade of such anxiety?
The answer is simple – having the right tools and the right people by your side to help you make these crucial moves will be the difference between profitability and losing money. So what are some of these right tools, and who are the right people?
The Right Tools and the Right People
Having the right tools and people only works if you have an overall strategy concept that incorporates them all into one cohesive, targeted plan.
Let’s consider the below, in order, as a possible means to creating this confidence in your business decision process:
- High Involvement Planning Strategy as your roadmap (overall strategy concept)
- GGOB Coaches (the right people to support your overall strategy concept)
- Accurate Market Trend Forecasting (the right tool for seeing economic trends well into the future)
- Accurate Sales Forecasting (the right tool for planning your inventory, labor needs, sales targets, budgets, and capital investments)
- Custom Price Index (the right tool for setting prices, establishing multi-year contracts, and managing your input costs)
- Business-Minded Economists (the right people to work with you and our GGOB coaches; they will translate economic trends into actionable business intelligence)
As they say, knowledge is power, but incorrect knowledge can be powerfully damaging. Surrounding yourself with the right people and the right tools during this time of uncertainty will give you the ability to not only survive, but thrive.
Here are some key tips to get you started managing inflation with confidence!
1. Sooner is better!
ITR Economics CEO Brian Beaulieu says: “Vendors will be pushing through price increases in 2022 wherever possible. It is likely that your best opportunity to push through price increases to your customers will be sooner in 2022 rather than later. As supply chains tend to normalize and the headline CPI comes down, it will become psychologically harder to be aggressive with prices.”
2. Don’t straight-line!
Mr. Beaulieu says that it’s normal to look at a pricing trend and make the assumption that it will continue in a straight line. Don’t be fooled. This assumption can lead to poorly timed decisions. ITR recommends using its rates-of-change technique to break this perspective and begin to see the true trends – the ebbs and flows – that you will need to understand to properly drive your strategy.
3. It won’t feel like what you’re reading in the news!
The news can tend to focus on hyperbole, generating an emotional response. We caution you not to fall victim to the headlines; rather, use a data-driven approach. ITR Economics is providing one such data-driven option as a new service for its clients. The service includes the creation of a price index specific to your cost structure, a 12-quarter forecast for that price index, and a quarterly meeting with you to review these insights and discuss ways to incorporate them into your pricing strategy.
How does this help?
As you may have surmised, the signals for the next depression are appearing, but that does not have to be scary. There is opportunity for growth so long as you prepare your company appropriately.
Start today by beginning your journey of building an effective pricing strategy; it will protect your margins through what will be a bumpy decade ahead. The tools, people, and tips provided here are all means to help you on your way to this effective plan.
Taking action is what we business leaders do every day. Now you can take action, with confidence, even during this time of trepidation. Our mission is aligned with ITR Economics' mission. We both want every business to thrive, and we completely agree that the right strategy – supported by accurate, reliable information – is the way to do so.
Get the right people to help build, support, and execute your business strategy. Great Game™ Coaches are an excellent resource for business owners to use so that they can start seeing results without having to worry about wasting time with the trial and error that comes with doing things on their own.