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Navigating Inflation: 5 Tips for Executives!

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The Point: As the world continues to face global turmoil and rising consumer prices, inflation has become a persistent problem. With a shortage of available workers and a sluggish supply chain, many companies are finding it challenging to navigate these obstacles. However, executives can take steps to not only survive but thrive in this environment. In this article, we present five tips for executives looking to improve their company’s financial standing…Enjoy!

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Five Tips for Executives to Improve Financial Standing

In a climate of rising inflation and consumer prices, businesses must be prepared to adapt and find ways to succeed amidst uncertainty. Here’s five essential tips to enhance a company’s financial standing and remain resilient in challenging economic times.

Tip 1: Revise Pricing Strategies

In times of economic uncertainty, pricing strategies can make or break a company’s financial standing. While raising prices can be a necessary step to invest in the future, it’s crucial to conduct a thorough analysis before making any decisions. Companies should review their sales projections, cash flow statements, and profit and loss statements to determine the optimal price increase that will help break even or maximize profits.

However, it’s also important for executives to consider the impact of pricing changes on their customers. They should weigh the benefits of higher prices against the potential loss of customers. A delicate balance is required between generating revenue and maintaining customer loyalty. Additionally, companies can explore alternative options, such as working with a different, cheaper manufacturer or cutting out a portion of a service, to mitigate the impact of inflation on pricing. By carefully analyzing pricing strategies and considering customer impact, companies can adapt to inflationary pressures while maintaining their competitive edge.

Tip 2: Differentiate Strategic and Non-Strategic Spending

During times of economic uncertainty, companies may need to make difficult decisions to cut costs and maintain profitability. However, executives must distinguish between cost-cutting measures that will increase profitability and those that will put the company’s long-term strategy at risk.

To identify strategic and non-strategic spending, companies should conduct a comprehensive evaluation of their business strategy, cost structure, and organizational design. By doing so, they can identify areas where they can cut costs without compromising their long-term strategy. Executives should focus on making targeted cuts to operating expenses that can increase return on investment while investing in strategic capabilities to accelerate growth.

Tip 3: Implement Automation

Investing in automation is a valuable strategy for businesses seeking to reduce costs, improve efficiency, and provide exceptional customer experiences. By automating repetitive or manual tasks, companies can free up resources that can be used to expand their business and improve customer satisfaction.

To identify areas where automation can be beneficial, companies should examine their internal procedures and external systems. This analysis will help identify bottlenecks and areas for improvement, which can then be addressed through automation.

However, it’s important for executives to consider the impact of automation on their employees. They should be transparent about their plans for automation and provide opportunities for retraining or upskilling. This will help employees adapt to changes and provide the company with a competitive edge.

Tip 4: Streamline Manpower

As the cost of labor continues to rise, reducing manpower can be a viable solution for companies to cut costs. The zero-based redesign is a valuable method for assessing not only what businesses do, but also how they do it. By automating and streamlining repetitive tasks, companies can reduce expenses and re-allocate resources to projects that have higher potential for growth.

To streamline manpower, companies must assess their business processes to identify areas that can be streamlined or automated. This includes evaluating the benefits of outsourcing non-core functions to reduce costs and increase efficiency. However, while reducing labor costs can help improve a company’s financial standing, executives must balance it with the impact it has on their workforce. Therefore, it’s important for executives to be transparent with their employees and provide them with opportunities for upskilling or retraining.

Tip 5: Diversify Revenue Streams

Diversifying revenue streams can help companies maintain revenue and increase profitability during times of economic uncertainty. Instead of relying solely on one source of income, businesses can generate revenue from multiple sources. This strategy requires significant planning and ongoing monitoring, but it has the potential to provide additional earnings with minimal maintenance.

To diversify revenue streams, companies should evaluate their existing assets and identify areas where they can generate additional income. For example, they could offer new products or services that complement their existing offerings, create a subscription-based model, or explore partnerships and collaborations. The key is to find opportunities that align with the company’s core values and strengths and have the potential to attract new customers.

SUMMARY

Inflation is a complex problem that requires a multifaceted approach. While there is no foolproof method for combating inflation, companies can take proactive steps to improve their financial standing. By revising pricing strategies, differentiating strategic and non-strategic spending, implementing automation, streamlining manpower, and diversifying revenue streams, executives can make strategic investments and develop resilience to weather the effects of rising inflation. Companies that take proactive measures on both offense and defense will be in a better position to outperform their rivals, even when the volatility subsides.

Sam Palazzolo, Managing Director

How to Embrace the Power of ‘Yes’ in Business Turbulent Times

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The Point: These are truly turbulent times in business for leadership. Make the right moves, and you’ll be a hero! Make the wrong or no moves, and you’ll be far from a hero!! I’ve seen a lot of negative-speak lately as COVID-19 takes an enhanced grip on the globe. Recognizing that it’s awfully difficult to agree to deals that no longer make sense (especially when your business hair is on fire!), it made me wonder if we’re looking at the business-landscape through too negative a lens? So in this post, we’ll explore how to embrace the power of ‘Yes’ in business turbulent times… Enjoy!

How to Embrace the Power of Yes’

Starting with ‘No’

“I loved saying ‘No’ when times were good… I cherish the opportunity now that times are bad to say it with even more conviction/volume!” a purchasing manager at a client recently shared with me. If they’re like most purchasing managers or leaders I’ve worked with, during negotiation they’ve learned the single best tactic towards achieving a successful outcome for themselves/their company is to begin with ‘No.’ While embracing the power of ‘No’ typically leads to continued negotiations, and hopefully positive (or ‘Yes’) results for both parties, the possibility exists for negotiations to breakdown, stall or worst case scenario come to a screeching halt.

So, what are the effects of starting negotiations with ‘No?’ From Harvard Business School and Harvard’s Department of Psychology, research has been conducted and summarized on how the utilization of ‘No’ not only leads to poor negotiation traction, but often times the negative feelings associated with future negotiations. Furthermore, negotiations that start with ‘No’ typically break down, as participants perceive the inflexibility of the other party.

Starting with ‘Yes’

In business turbulent times such as these, the last thing I would recommend to a client is to take a bad business deal. As a matter of fact, I don’t think even in non-turbulent times taking a bad deal in and of itself is a good option! However, is there a way in which we can successfully not start with ‘No’ during negotiations? What would be the outcome in starting with ‘Yes’ instead?

Starting with ‘Yes’ overcomes the initial negativity often experienced during a negotiation. The inevitable “I should have started higher” thought permeates the negotiators mindset. However, this can not only lead to earlier agreements, shortened sales-cycles, but also better outcomes for both parties now (as well as in the future!)

‘And” is Better Than ‘But’

So how can starting with ‘Yes’ be better in negotiations than starting with ‘No?’ The key, according to a mediation expert, is to utilize the conjunction ‘And’ instead of ‘But’ in negotiation moments. Supported by the Harvard research, this technique often “[O]pens a window of opportunity for addressing multiple issues, and using new approaches, while mitigating the taint of pejorative shadings [leaves both parties].” ‘And’ also avoids the dismissive nature associated with using ‘But’ during negotiations.

Starting with ‘Yes’ using ‘And’ Example

Here’s an example of how to properly utilize ‘Yes’ as well as ‘And’ in a typical negotiation. For framing purposes, your company is being pitched a new software piece that will significantly reduce costs and increase utilization (Yes, this is possible!) However, it’s your birthday and the strategic partner calling on your company knows it… So, they inquire:

SP “I heard it’s your birthday today?”

YOU “Yes, that’s correct, and I’d love a cup of coffee and a doughnut.”

SP “Well then let’s go get one!”

Admittedly, this is not the greatest negotiation example (after all, who wouldn’t like a doughnut, and do we really need to wait until it’s your birthday to have one?!?) But the point I’m making is that if we had started with ‘No’ and utilized ‘But” in the response we’d be looking at a negative negotiation with the potential of stalling/stopping and having caused future negotiation to not occur (All future negotiations!)

SUMMARY

In this post we’ve explored how to embrace the power of ‘Yes’ in business turbulent times such as these. We explored the Harvard research surrounding the negativity of ‘No’ as well as how to positively leverage ‘Yes’ for successful negotiation outcomes. The key in utilizing, and especially in starting with ‘Yes’ is to use the conjunction ‘And’ to stipulate what you’d like to see have happen as a result of beginning, and staying, at ‘Yes.’

Sam Palazzolo