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Monday, December 11, 2023

How to maintain local business growth in Inflation 

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For each business, inflation has a different impact because it ripples through the economy in different directions and at different rates at different times of the year.  

According to the Bureau of Labor Statistics, the Consumer Price Index increased by 6.8 percent between November 2020 and November 2021, marking the first time this has happened since June 1982. Although no one knows precisely how high inflation will be in 2022, it is projected to continue to rise in the following year.

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They are already using these seven strategies to guarantee that their businesses continue to prosper in 2022, when inflation is anticipated to be at its highest level ever.

So, let’s have a look at how to maintain the growth in the strategies listed below:

  • Put whatever extra money you have into interest-bearing savings or checking accounts to earn interest

Since interest rates have been so low in recent years, it has been trivial to distinguish between a conventional checking account and a checking account that pays interest.

However, things are beginning to shift in that environment. Three hikes in the federal funds rate are likely to take place in 2022, with rates potentially reaching as high as 2.1 percent by the end of the year.

Despite the fact that it is much higher than in the previous decade, it is nothing near the levels witnessed in the early 1980s. Over the long term, even if borrowing rates rise, interest-bearing assets are expected to generate more money for their owners. 

While it may take some time, you should begin placing money into interest-bearing certificates of deposit, money markets, and savings accounts, as well as some bond funds, since the returns will begin to accumulate over time.

  • Take into consideration refinancing your bills

Current interest rates on residential mortgages are approximately 3 percent, although the interest rates on conventional bank loans vary from 2.5 percent to 7.0 percent, depending on the lender. 

Interest rates, on the other hand, will begin to climb at the end of 2022. In the event that you have short-term debt, now is an excellent time to lock in lower interest rates and refinancing it.

Keep your amount on your high-interest credit card low and don’t make the mistake of attempting to pay it all at once. Even if it means taking out a second loan on a valued asset such as your house or business, consolidating your debt into a longer-term loan with lower, fixed interest rates is a good idea.

Small Business Administration (SBA) lenders may be able to offer you with a Section 7(a) fixed-rate loan for working capital or to refinance existing business debt up to $5 million provided your firm meets the eligibility requirements.

  1. Consider the technique of “shrinkflation” as a means of rising prices

Concentrate your price increases on certain product lines rather than raising prices across the board. This will allow you to maximize your margins while also increasing the likelihood that customers would accept your price increases. 

Some of the clients, as well as many major organizations, are engaged in a practice known as “shrinkflation,” in which they provide the same quantity of products or services for a lower price than they would otherwise.

2. Make certain that long-term agreements are in place

If your suppliers agree, try to negotiate a longer-term supply deal with them. To ensure that you remain a tenant, talk to your landlord about signing a longer-term lease with agreed-upon, predetermined increases in your monthly rent. 

The same is true for higher-paid employees: consider signing into a contract to formalize your relationship with your employer. With the help of these modifications, you will be able to better budget and manage your cash flow in the next few years, allowing you to have more control over your significant fixed expenses in the future.

3. Investments in commodities, real estate, and equipment are all recommended

Customer’s that are well-versed in the market do not use the approach of waiting for prices to rise. People who have access to financing and bank loans are storing up on the fundamental products they will need for their operations in preparation of higher costs in 2022.

In addition, the government is making investments in real estate and equipment, which have historically kept pace with rising costs throughout inflationary times. 

4. In the commercial world, technology should be a top focus

Businesses increase their technology investments during inflationary times in order to get more work done with the same or even fewer personnel while keeping costs under control. Focusing on the better business branding strategy is essential for sustaining in longer term. The strategy includes investments in robotics for manufacturing, self-service kiosks for retail and restaurants, RFID and bar-coding systems for inventory management, as well as artificial intelligence-driven automation to answer questions and complete workflows without the need for human interaction. Find out what your software and technology partners can provide you at a price that is accessible for your organization.

5. Take another look at your current investment portfolio

As a local business owner, it’s likely that you’ve accumulated wealth in a variety of stock, bond, and asset accounts. You should schedule a meeting with your financial counselor as soon as possible.

Depending on your risk tolerance and income, investing in commodities such as gold and silver, which have historically outperformed the stock market during inflationary periods, may make financial sense. However, doing so entails a greater degree of risk and may not always be the most prudent course of action.

Increasing your investments in large-cap equities funds, which get their revenues from the earnings of well-managed app making companies, are a viable option when the cost of living increases.


Increased bids, expedited delivery, and the employment of more staff or the payment of overtime are common methods of dealing with immediate supply constraints. TIPS (Treasury Inflation-Protected Securities) are being considered by clients because they are backed by the United States government and provide inflation protection. 

In the same spirit, don’t try to figure this out on your own; instead, talk with your financial adviser to determine the best mix of assets for your risk tolerance.

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