Inflation is one of those topics that seems to make headlines every few years. From rising prices at the gas pump, to increased costs during grocery store excursions, people pay attention when spending starts to increase. The U.S. Bureau of Labor Statistics reports the nation’s all items index rose 7.5% for the 12-month period ending in January 2022 — the largest such increase since February of 1982. Of course, inflation doesn’t just impact people’s personal lives. For those who own or operate a business, it can introduce very real financial obstacles to the mix.
BCH is big on being there for our clients when it matters, including when inflation is on the rise. Read on to learn about the issues surrounding the current trend, ways it might impact your business — and steps you can take to remain on solid footing.
Factors Contributing to the Current Inflation
As with any large-scale trend, our current price increases are the result of a number of issues coming together. The ongoing labor shortage, for instance, means companies everywhere are trying to carry out business as usual with fewer people to help make it happen. That often results in production lags and shipping delays that lead prices to creep up. Supply chain concerns including barge canal bottlenecks and demand that outpaces increased production levels have a similar effect. The uncertainty associated with major news events, such as Russia’s invasion of Ukraine, can also impact markets.
Inflation’s Impacts on Today’s Businesses
In addition to the more obvious effects, such as higher fuel bills for company vehicles, inflation can impact company costs in other ways. Those planning to make needed repairs, or to expand their physical structures, should expect to pay more out of pocket, thanks to rising costs for parts and materials — and construction crews’ issues procuring manpower. Price increases in other areas can also impact everything from new vehicles for your fleet, to the coffee your crew uses each morning, making it imperative for companies to keep an eye on spending during such times.
Steps to Keep Your Company Better Prepared
Rising costs associated with inflation might not be completely avoidable, but there are ways to stay a step or two ahead. Take stock of expenses — not just set prices, such as monthly insurance and rent payments, but for tools and materials you use on the regular — and keep those records handy. Understanding what you typically pay, what you’re paying now due to inflated costs (and what you can afford to pay, should prices continue to rise) can go a long way toward keeping your bottom line healthy. We also encourage getting your risk management experts involved. Ask for assistance evaluating your current operations and pinpointing any areas that leave your business at risk of loss, and take steps to keep such losses from happening. Evaluating factors such as your business insurance costs to make sure you’re paying for the right coverage — at a sensible price — can also help.
Inflation might feel like a four-letter word, but your BCH team is here to help when prices rise — and long after things return to normal. Our Inflation and Insurance Overview sheet offers other helpful news you can use. And if you have additional questions surrounding the issue, we invite you to contact our team. We’re always here to help!