The current increase in price of fuel and depreciation of our currency against the American dollar is really bad news.
It heralds sharp increase in basically all products in the market and consequently low purchasing power of customers, majority of whom have fixed income. This is what economists call inflation.
With Ukraine and Russia conflict still raging in Europe and disrupting supply chain, it is almost certain that things can only get worse going forward.
Inflation hurts all businesses but mostly it is small enterprises that suffer most because unlike bigger firms, they don’t have reserves, assets or ability to increase the price of their offers in a competitive market.
Therefore, many small businesses that survived Covid-19 pandemic are at high risk of being wiped out by the eminent inflation unless they make the right decisions now.
As your customers lose purchasing power, they will tend to focus more on basics and items they cannot do without. They will become more conscious of value of every cent they spend. This means you may have to sweat to get a customer spend money on your product if you don’t offer explicit value.
On your side, you must also be economical with your money and other resources. You need to think twice or thrice before spending money on anything.
Streamline your offerings, cut back on your overheads and operation costs without compromising quality. The idea here is to still deliver incredible super value to customers who are going through hard times as well.
Recently I found a business advert in a local language that loosely translates – our price has come down, our quality has gone up!
This is what every customer is looking for- value for their money and not just low price.
As an entrepreneur, you must not believe the narrative that things are bad globally and all businesses are suffering. Some are not.
Although it is true that things are tough and will get tougher generally, you can be an exception.
Businesses and individuals will be affected differently by inflation and the ultimate outcome will depend on how they respond.
Fundamentally enterprises exist to solve societal problems. In other words, more problems mean more business opportunities to those who are able to solve those numerous needs.
Rather than believe things are terribly bad and do nothing, think of creative ways of helping people around you to solve the problems that will be brought about by the inflation and by so doing, they will pay you a premium.
Being pessimistic when faced by challenges drains your energy and creativity that you need to take actions that may lead to a breakthrough.
You must learn to develop resilience in the belief that things will get better and in every obstacle there must be a way through or around it.
Do not undersell your products or services when sales are low. Instead, change your marketing strategies by creating and highlighting more value to your potential customers.
In all times, people don’t buy goods because of low price. They buy because of the value they will get from them.
Mr Kiunga is a business trainer and the author of The Art of Entrepreneurship: Strategies to Succeed in a Competitive Market. [email protected]