It’ll take a steady hand to combat this period of inflation

As much as individuals, companies are also now having to deal with increasing prices. Supply constraints are compounding this, as will higher wages caused by labour shortages as these rise further. Plus, with central banks globally having to raise interest rates to try to combat inflation, the severity of the issue facing businesses is becoming clear - that this period of inflation and its impact is unlikely to be short-lived.

Typically, the best performing businesses in past inflationary periods took steps to boost productivity, not least by cutting costs. And as Inflation tends to be kinetic in nature, your business needs to be just as agile to counter any such unpredictability.

So companies that take decisive steps now to find new sources of growth will be best able to defend themselves against this increasing inflation. Equally, those that are able to monitor movements that might make their business more vulnerable, will be best placed to hedge against it throughout.

With rising costs, doing things the way you have always done them could be a luxury your busIness can no longer afford. In an inflationary period, it is important to understand where money is spent and who spends it, by business process and function.

This level of transparency of spending for all within the company can be the basis of improving productivity moving forward. It enables a higher level of accountability throughout the business to ensure that decisions are made knowing the full impact on the P&L.

Yet, although profitability is the bottom line, inflation 's impact goes far beyond this. It is imperative to evaluate the entirety of your activities, as any disruptions and cost hikes can have consequences. The objectivity and insights of an expert, external team can help facilitate some tough decisions.

At GSM we'll cross-examine your operations. Whether it's supply chain cost issues, the spending on business processes, shipping and storage costs, or the costs of services and production. We'll also help you review your operations from a cost perspective to determine what departmental, or indeed cross-functional change may add the most value.

So, with a focus on spending better, we'll help you scrutinise the costs of your business operations and the costs attributed to how those activities are performed, helping you to introduce steps to eliminate unnecessary spending.

Equally, protecting profit margins is as important as keeping on top of costs.

For many small business owners, increasing prices is the natural reaction to inflation. And while this strategy may be necessary in some instances, it can also lead to a loss of customers, if you do so too quickly, especially as consumer prices and global energy costs increase.

So, there are other measures businesses can take to bolster their financial health. For example…

• assessing your assets to ensure they are working as productively as they can for you.  If they are not, or are surplus to requirements, now might be a good time to divest yourselves of these
• investing in assets which will make your business more efficient, especially if this will reduce your dependency on increasingly expensive labour
• with a thorough review of costs on the table, it might be time to consider how you could innovate.  For example, are you making the most of tax breaks such as R&D tax credits?

In acquiring the knowledge of how your costs align with your business goals, you can develop a solid understanding of the true drivers of your costs during this period of inflation. Further, with interest rates being historically low and not many business leaders having had to deal with the likes of the heightened inflation expected, GSM has over 100 years of weathering the storms of so many economic cycles that our experience and expertise will deflate the most arduous circumstances which might impact your business, even if the inflationary hiatus stays with us for longer than we would like.

To hear more of how GSM can be a true partner, there with tangible advice and tools for the toughest of times and to propel you forward for success in the best of times, call GSM today on 020 7935 3793