Recently released inflation data showed an increased rate of 4.2% year-over-year and 0.8% month-over-month. This is the fastest rate of inflation that we’ve seen since the early 1980s. What does that mean for you? It means that the prices of everything are going up. As a small business, if you don’t do anything and your prices stay the same, and the cost of everything else goes up, you’re going to end up making less money.
In a hyperinflation-like environment, there are a few things that you should be looking at:
- Prices. You need to take a look at your own prices and raise them to at least match inflation. Chances are with the volatility in the markets, you could increase them even more to increase your profitability
- Lenders. Go to your lenders and make sure you’re locking in long-term low rates because as inflation goes up, if you’ve locked in a longer-term rate at 4% for 20-25 years for your loans, you’re going to be in a great spot if interest rates go up to 6% or 8% like they have in the past.
- EIDL Disaster Loans. If you took a EIDL Disaster Loan from the SBA, go back, and look at your loan because they originally were for $150,000 and are now up to $500,000. These are 3% loans fixed for 25 years, which is great in an inflationary environment as extra cash and extra safety for you.
Make sure you’re looking at your looking at your prices and locking in low interest rate loans now to prepare for higher inflation in the future. This will ultimately increase your profitability and safety so you can reach your goals.