Which way to turn
Inflation and recession are cruel task-masters.
If you provide goods or services that can be readily sourced from alternative suppliers, and at a lower cost, trying to beef-up your sales prices will likely result in lost income as your customers go elsewhere. If your costs are increasing this can only lead to lower profits.
If you sell luxury goods, there will likely be a reduction in demand as customers concentrate their expenditure on meeting rising fuel and food bills.
Business owners can react by reducing their own costs but there is a limit to the saving that can be made.
There is an argument to mothball business activity. i.e., reduce activity and hibernate until market conditions improve, although this is unlikely to prove a workable strategy for an extended period.
Businesses who supply goods or services with no competition, or for goods that have no ready substitutes, are in the best position as they can increase their prices to cover cost increases with little or no impact on sales.
During this period, all businesses would be wise to take control of cashflow and scale down or at least reconsider investment activity until market conditions become more buoyant.
If you are in business and really don’t know which way to turn, please call so we can talk over your options.
No Advice
The content produced and presented by Streets is for general guidance and informational purposes only. It should not be construed as legal, tax, investment, financial or other advice. Furthermore, it should not be considered a recommendation or an offer to sell, or a solicitation of any offer to buy any securities or other form of financial asset. The information provided by Streets is of a general nature and is not specific for any individual or entity. Appropriate and tailored advice or independent research should be obtained before making any such decisions. Streets does not accept any liability for any loss or damage which is incurred from you acting or not acting as a result of obtaining Streets' visual or audible content.
Information
The content used by Streets has been obtained from or is based on sources that we believe to be accurate and reliable. Although reasonable care has been taken in gathering the necessary information, we cannot guarantee the accuracy or completeness of any information we publish and we accept no liability for any errors or omissions in material. You should always seek specific advice prior to making any investment, legal or tax decisions.
Share this article