Convergence

How to Prepare for Inflation

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Thanks to a special convergence of events, we find ourselves in a tough economic situation not seen for at least two generations.

Those who are fast to react and flexible in their approach can not only survive, but prosper in this era of global inflation.

All indications, particularly the moves by the U.S. Federal Reserve, are clear: we will have a recession. The Fed’s priority is unmistakable – to curb inflation first and precipitate a recession.

Focus on cash above all.

Assess cash profits, not paper profits or percentages. Your company should thoroughly manage receivables and inventories and identify cash traps, such as slow-paying customers and hoarding.

Reassess your capital expenditures in the context of recession and inflation.

Rethink your business model.

Map your end-to-end value chain to identify the potential effects of inflation on your business model. Your company may become smaller, but it will be robust and ready to take advantage post-recession.

Do not get caught up by one number, such as the consumer price index (CPI). Know specific price trends. Inflation rates vary industry by industry.

Use digitization and data to forecast demand, competition, and consumer behavior. Practice fast adaptation to changes.

Ask yourself, how can my company adapt?

Leaders who openly communicate and who skillfully prepare for today’s economic volatility will almost certainly perform better.

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