5 May 2024 From Executive VP Continued → professionals across America write about the “forever labor shortage” driving keen industry competition for a limited supply of workers, especially in less-popular skilled trades. 5. Invest in business technology Investing in efficiency can save you money in the long run. Protect your bottom line by investing in technology that helps you accomplish more with fewer resources. Look for opportunities within your business to simplify operational processes, collate better cost and production information, and increase internal efficiency. Technology gains are available well beyond those of equipment, methods, or forest mechanization. 6. Reduce business expenses Reduce business overhead costs and variable expenses. Streamline service or product offerings can help hedge against inflation. You must build flexibility into cash flow projections and financial analysis. The more affordable your expenses are, the more cash you can put toward production, improved customer service, or creating a cushion for emergencies. As you review expenses, consider the value each item brings to operations. 7. Be proactive about debt management Regularly review debts and identify areas where you can reduce or eliminate debt that’s too expensive. It also means negotiating or renegotiating favorable terms with lenders. If more working capital is needed to keep up with customer demand, getting a business loan can help. However, 61% of business owners surveyed for the February Small Business Index said they were not interested in a loan now. Taking a loan with high inflation may help dollars go further; if inflation persists, you’ll pay back borrowed money with cheaper cash later. Small Business Challenged by a Tsunami Greater Than Inflation Alone Expenses are skyrocketing, as small business now grapples with additional harmful new government policies that drive higher inflation for labor and their total cost of goods and services produced. A tsunami of overreaching added small business hurdles are worsening inflation’s impact, because of their indirect cost escalation. Rising demands often outpace the short supplies of labor and most all inputs—causing higher prices. These added costly new policy impacts on small business include: transportation burdens, supply-chain disruptions, employer/labor mandates, wildfire/ environmental risks, hard insurance markets, borrowing rates up, worse regulation/tax, social inflation (litigation), decarbonization regulation, fuel limits, alternative equipment, and green energy unreliability or infeasibility. 2024 First Quarter Inflation on The Rise U.S. inflation saw a sharper-than- anticipated rise in March, alarming a costly trend upward that began in January to hit small business. The rise sent a worrisome signal of higher inflation, short labor, unprofitability, and punishing small business borrowing rates. Small businesses are most vulnerable to impacts of inflation, because of their lower capitalization and market position. Monthly Consumer Price Index data for January, February, and March signaled rising inflation, and a heating economy, which signals a path to the Federal Reserve not cutting its interest rate anytime soon. U.S. all-items Consumer Price Index (CPI) rose again by 0.4% in March 2024, or a 12-month rise to 3.5%, a larger annual increase than February’s 3.2%, as reported by U.S. Bureau of Labor Statistics. Indexes which increased in March include many items vital to living and work: gasoline, electricity, housing, motor vehicle insurance, medical care, apparel, and personal care. • West Region CPI 12-month, March 2024 rose to 3.6%, compared to 3.2% the prior month • West Region CPI one-month, March 2024, rose an alarming 0.9%
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