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How inflation impacts your business

On Behalf of | May 24, 2022 | Commercial Real Estate

In general, the value of the US dollar decreases due to inflation. This year inflation is higher than it has been in 30 years, and it may hurt businesses that cannot pass along the higher costs.

Inflation on consumer goods increased 8.3% over the last 12 months. While consumer goods such as food and personal products do not necessarily mean inflation on commercial property and businesses, they can. All aspects of the economy are connected, and inflation may cause trouble for your company in many ways, such as:

  • Your employees: Even if your company does not provide consumer products such as food or goods, your workforce still needs them. Regardless of how generous, their salaries may not go as far, leading many to seek new employment elsewhere.
  • Your inputs: If consumer products prices have risen, the chances are that the materials that go into them are also growing. Even if your business is primarily service-based, such as marketing or accounting, your overheads may rise.
  • Your energy costs: Energy costs are rising across the country and here in Texas. Rising energy costs go hand in hand with rising overhead costs, but it is so significant that it is a concerning issue on its own.
  • Your customers: With rising costs all over, your customers may find themselves unable to pay for your services. You may end up raising prices to meet expenses and lose your customer base.

Inflation anxieties are ever-present for any business, large or small. While a larger, more established company may initially weather these changes well, extended inflation will likely cause wide disruption.

The worst effects of inflation most often hit companies that stick to “business as usual.” Today’s business landscape requires nimble, thoughtful responses to rapidly changing circumstances.



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