Inflation is on the rise. How do I know? Because I read it on my income statement. If you don’t believe me, then believe the Feds. They recently raised the interest rates to slow our economy. Another tell-tale sign is our employment rate is low. When employment rate is low, employers have to pay higher wages for entry level employees, and that cost is passed on to the consumer.
Since last year I have been watching FlagandBanner’s cost of goods rise. Last week, I confirmed in my mind and on paper, inflation was amongst us. My COG (cost of goods) had risen 5% and was staying there. Sure, that doesn’t seem like a lot, just 5% percent, but it is. If left run unchecked over a one-year term, a $4 million-dollar business would suffer a $160,000 loss in profit. What!
I’m a little mad at myself for not growing a pair and raising prices sooner. Everyone, even old pros like me, are fearful of raising prices. The next time your company’s sales drop and a marketing meeting is called to talk about it, the first thing your marketing team will say is ‘its price.’ But it never is. This fear of being overpriced and unworthy is innate across all businesses.
If you feel like your people are working harder and profit is waning, I recommend pulling out your monthly income statement and comparing it to last year’s statement at the same time. Happy Hunting.