You Are Not Alone: Help Your Business Survive Inflation with Cooperation and Relationships
Every individual and business is feeling the effects of inflation. Price sensitivity is high all along the supply chain, and the uncertainty makes forecasting a daunting task.
So what’s a business leader to do in this environment when the cost of goods is on an upward trajectory with no end in sight?
These are times when relationships, transparency, cooperation and agility rule the day. Inflation is affecting everyone, and no one weathers it alone.
Conscience is a great guide. Resist knee-jerk instincts and making decisions purely based on cost pressure. Burning bridges now just to save a buck only contributes to instability and can be detrimental in the long run. Instead, rely on relationships and engage in frequent, transparent conversations with suppliers to uncover solutions and share the burden of inflation. The best survival instincts are those that ensure mutual success.
Leverage information to identify minimum thresholds and bargaining chips. Analyze available purchasing, sales and logistics data to identify the pain points and snarls along your business’ pipeline to determine how much flexibility you have with supplier timelines and prices. Having the data on hand to share with suppliers will be useful when negotiating best-case, moderate-case and worst-case scenarios. It may bring to light opportunities to consolidate delivery routes, decrease or increase frequency of shipments or create longer-term contracts or bulk orders to ensure sufficient supplies at today’s prices.
Talk to your high-volume customers to understand more about their plans. The more you know about your customers’ forecasts, the better you can plan to fulfill their needs. Even as you trouble-shoot with suppliers, look for opportunities to better serve your customer base. Evaluate existing contracts to devise mutually beneficial terms, even on a short-term basis until the supply chain stabilizes. Inquiring about your top customers’ priorities for the next 6-12 months may uncover flexibility in how you fulfill their orders.
Lean on the knowledge of your peers. In challenging times, the hive mind can be invaluable, even among competitors. Engage with industry organizations or form a group of leaders within your network to exchange information about how peer companies are working around supply chain hiccups and the inflationary effects of demand outstripping supply.
Call on a trusted financial advisor who “has been there.” Find a veteran banker who has lived through recessions and understands the challenges and the tried-and-true solutions that saw businesses through adversity. At Pinnacle, our bench strength is deep, with advisors who have been in financial services for two decades or more. They’ve been through previous inflationary periods and have helped clients weather the challenges.
Retention, retention, retention. With the labor shortage showing no signs of abating, it’s critical to demonstrate, in word and deed, that you value your employees, your suppliers and your customers. It costs far more – in time, effort and money – to find new people, new vendors and new customers. Never miss an opportunity to show gratitude and leverage benefits, both tangible and intangible, for the good of your partnerships. The trust and loyalty you gain from working for mutual prosperity will pay off even after the supply chain smooths out and inflation is in the rearview mirror.
Rick Seadler is a financial advisor based at Pinnacle's Symphony Place office in downtown Nashville. He can be reached by phone at (615) 744-3721 or by email at Rick.Seadler@pnfp.com.
