Inflation in Alberta has been increasing over the last years. Currently the province’s inflation sits at 6.5% annually. This could mean your business has lower margins or might face tight cash flows in the future. That’s why we're here to share advice on how to tackle rising costs in your industry.
Your industry could be impacted by many factors, but here are the top drivers of inflation and some advice on how to manage it:
- Labor costs
- Retention
- Raw materials
- Debt
There are three general advices when dealing with raising cost and what opportunities they generate.
Learn and manage your margins:
Big changes in cost are an opportunity to learn what are the main factors to affect your profit margins.
This is a chance for you to look for advice from your accountant or to implement a more lean financial management system like Profit First. There is a lot of information online on different methodologies you can use.
Re-evaluate some practices:
Linked to the previous point, once you deeply know the reality of your finances and where there’s possible change, re-evaluate your processes and implement changes that will enable you to cut costs or produce more with less.
When you look at your business assets and practices, what is absolutely necessary to create a great experience for your client and what is a nice to have? This article also shares some best practices.
Invest in innovation and new ways of operating:
Another possibility if you have access to funds is to invest in technology or new resources that will enable higher production with less input. A newer machine, an automation effort could bring cost down long term and adjust your margins.
In the same way, thinking out of the box and sharing your assets, location, machinery, etc. can bring an extra stream of income with no cost or drastically cut fixed cost your business has.
