Prices of goods are inflating fiercely! We’ve got roaring gas prices and fire-breathing prices for commodities. Even if we slave all day and work extra shifts, some of us just can’t cope with the rising economic changes. It’s not just private citizens or the workforce affected by the massive price increase. These economic changes affect big-time corporations, small businesses, and wholesale suppliers. Since the masses cannot proactively cope with the inflating prices of goods and services, companies need to adjust. Food prices have increased, and some have decreased in serving sizes. Other companies have adjusted their work hours because rental space prices have increased. All persons are affected by the massive change in the global economy.
Since it is getting more challenging to cope with the changes brought by inflation, entrepreneurs like yourself must learn to adapt to the economic adjustments. Now, on the note of rising prices, businesses of all sizes must adjust to the economic changes. Businesses such as startup companies have the power to change how prices may lower. In this article, you will learn how you can work on achieving better sales. Despite the massive increase in prices, businesses, from a collective perspective, may be able to push the country’s economic standing to a better level.
Table of Contents
What is Inflation?
What is the Correlation between Commodities and Inflation?
How does Inflation Erode Our Monetary Power?
Elasticity and Pricing
What is a Recession?
Focus on What You Can Control as an Entrepreneur
In a Nutshell
What is Inflation?
Inflation measures price increases for a set of goods or services for a particular period. Inflation contributes to an unprecedented change in the economic instability of a country. Some countries go through phases of scarcity and extreme economic decline brought about by inflation. Though inflation isn’t a behemoth by nature, as it is a monetary phenomenon, it still contributes to how individuals and companies function in society. The colossal effect of inflation drives companies and individuals to work harder and cope with economic changes.
You can imagine how increasing inflation creates a plutocratic state with a societal divide that makes a state more fragile than it is. A Fragile State or Failed State is a political terminology that describes how a state has inevitably fallen into an economic depression that inhibits them from performing effectively and obtaining their needs, reaching an ultimate collapse.
On the other hand, some countries have a remarkable history of going from rags to riches. These countries are Switzerland and Singapore, which had to undergo extreme economic challenges to achieve their country’s goal of prosperity. These countries have worked towards achieving a lucrative method to reach their goals. Some of the methods they invested in include the development of manufacturing industries and shaping their own Gross Domestic Product (GDP).
Gross Domestic Product in Economics measures the value added to a product produced locally. GDP is a vital indicator of a country’s economic performance. The most significant GDP contributor in the Philippines is the agricultural sector, with the private sector as it comes second. The private sector consists of private companies in different industries. The most prominent industry among these private sectors includes retail, food and beverage, and innovative initiatives such as eCommerce.
You can choose between two things if you feel troubled as an entrepreneur. Give up and admit defeat, or rise and keep persevering. Feeling disheartened is part of achieving a prosperous business and economic standing. As you go about working on different strategies in your business amidst the rising inflation rates, may gain the inspiration to work smartly.
What is the Correlation between Commodities and Inflation?
Commodities like agricultural goods, gas, minerals, precious metals, oil, and energy are directly affected by external factors that may result in an economy’s inflation or deflation. Economic fluctuations in recent years have been more rampant than they used to be before the 21st century. Despite this, you must also learn that commodities alone are not the single indicator of economic inflation.
How all these affect businesses in different industries is related to how consumers will behave according to the changes in the economy. If the cost of commodities is higher, companies will have to adjust their offers in terms of price, number, or price. For example, if the cost of gasoline increases, so will other goods and services that use gasoline, whether in production or transportation. For a company that sells bread, they may be affected by the inflation of gasoline costs which will make them raise their prices or offer fewer loaves of bread for the same price.
This is one of the things entrepreneurs must observe to serve their respective markets better. Part of running a business is observing the different fluctuations in the economy. Though we cannot predict how the economy will turn out daily, what we have control of are the business strategies that we set according to the observations and research we have made. If we can create a comprehensive analysis of how the market has been performing in a range that covers a two to three-month period, then we have a higher chance of creating plans that are effective for the performance of our business.
Compared to starting from nowhere or beginning plans on a whim, having a gauge of the activities of the market will make our plans more connected to our goals. As we work on the market analysis, we are also drawn more closely to getting to know the market we serve. When we have a general idea of how our market performs, we gain a better understanding of learning the ways that make our business products or services more personalized according to their needs.
How does Inflation Erode Our Monetary Power?
Have you gone to the market lately? Have you noticed how much less you could purchase from frequent stores? It seems like we have the same budget for our expenditures, but we cannot buy the same goods as we used to. For example, before inflation, you had enough to buy food for cooking, shampoo, soap, laundry products, and snacks. Now, your money can only go as far as buying food for cooking, shampoo, soap, and a cheaper option for laundry products. Farewell, snacks! Farewell, aromatic fabric conditioner!
Our ability to purchase goods and services declines as prices skyrocket. The gradual rise in prices erodes the power of our money. It’s frustrating to think about working extra because we have to cope with the numerous economic changes. It feels handicapping to resort to different methods to earn money. Businesses may perform better by offering reasonably priced products or services to encourage customers to purchase their products or services.
As inflation continues to rise, our money can only go as far as purchasing goods in a lower quantity. Inflation decreases the value of our money as time goes on. If we look back and imagine having 100 Pesos to spend, and we’re in the 90s – we could buy many things already. We can buy groceries, pay bills, ride public transportation, and still have some change to spare. Now, our 100 Pesos can only go as far as purchasing a liter of gasoline at a local gas station, and sometimes it still wouldn’t be enough.
Elasticity and Pricing
Given the economic changes, it wouldn’t be surprising if inflation continued in the next couple of years. Entrepreneurs have devised countless ways to work around inflation without running their profits down the drain. A classic mitigation method that entrepreneurs have worked on is raising prices and matching these higher prices with marketing strategies. This way, individuals will not feel as discouraged about the cost of purchasing a particular product or service.
However, despite entrepreneurs’ newly adopted mitigation strategies, individuals can only enjoy these methods for a short period. Intellectual users will grow tired of hearing and witnessing the same old strategy repeated by different brands. On this note, entrepreneurs become even more troubled as their marketing methods no longer entice the public audience.
On the contrary, because there are different mediums and technologies that entrepreneurs and consumers can use, the agility towards combating inflation becomes even more progressive. Through the technological advancements available in the present day, entrepreneurs can obtain information such as statistics about how users perform at a given time and towards a given marketing strategy. Entrepreneurs and managers must devote reasonable effort to analyzing their consumers’ behavior to cope continuously with the vastly changing economic realities.
Recalibration of business options against inflation is another action method that needs attention. To recalibrate one’s business strategies means producing relevant branding and pricing strategies and creating plans for inclusive consumption for the public audience. Recalibration also involves implementing profitable offerings that may include appropriate promos according to consumers’ behavioral economics. In this method, entrepreneurs must be wary of consumers’ desire for quantity and quality products or services. Consumers will not simply expel their money on offers without receiving a better quality or a larger quantity of a product or service.
What is a Recession?
This economic phenomenon, referred to as “recession,” is the decline of economic activity for a significant period. A recession usually lasts for months, creating critical changes in the Gross Domestic Product (GDP), employment, income, industrial production, international trade, retail sales, and digital trade. Economic recession is often a result of economic instability from calamity, inflation, unemployment, or other financial and societal issues. When people cannot obtain quality employment, there will be no earnings to use over expenditures.
One example of an economic recession is found during the height of the COVID-19 pandemic when people were prohibited from lurking in the outside world. Jobs involved in public transportation have experienced a struggle to cope with the changes brought by the COVID-19 pandemic, creating a recession in their economic face. On a larger scale, when a country falls into an economic recession, that country will experience weaker spending power.
When the masses have weaker spending power, companies will experience fewer sales, and some may result in closing their businesses. Aside from sharing a pandemic and inflation, other factors affect the economy and create a recession. You can anchor from the word recession that there is the word “recess,” Unlike your favorite subject back in grade school and high school, a recession is nothing more than a struggle for people and businesses. Some of the factors that create recession include…
- Industrialization and Technologization
While newly invented technologies help in productivity, other adverse effects are brought by technologization. Industrialization also involves using more machinery, decreasing the need for employed workers. Some of the impacts of automation aren’t limited to employment and corporate affairs alone. Some of the adverse effects of industrialization are on the environment, causing more extensive and unwanted changes to the ecosystem.
Despite having good inventions that aid in producing goods and services, another machinery is not helpful to the environment. These machinery that emits greenhouse gasses are also contributing to the climate crisis. The climate crisis is an urgent matter that needs to be addressed soon. Having scarce resources brought about by forest fires and floods is nothing we would want as entrepreneurs and human beings. Even the air we breathe gets polluted by the excess carbon dioxide produced by machinery.
Back in history textbooks, the breakthroughs brought about by industrialization have also caused employment to decline. During the 19th century, when technology and manufacturing equipment grew, labor was given a downtime. In the American Industrial Revolution, dating back to the 18th to 19th centuries, industries were dominated by the immersed amount of machinery. Despite the fast-paced changes brought about by industrialization, some populations in lower economic classes could not cope.
From industrialization, employment, and climate efforts – we are brought to the understanding that each action we do is, in one way or another, intertwined with how our future will turn out. With the reality of inflation that we face in writing, we must learn to work around understanding how better we can cope with these social phenomena without depreciating the value of our work and without staggering our customers.
- Excess Inflation
Can you imagine if prices just continue to rise by the day? Even if we had trillions of dollars in our pockets, we still wouldn’t be able to cope with these changes. The continued rise of inflation affects the population of the middle to lower economic classes. These phenomena affect how our everyday lives function, as each course is inevitably affected and interconnected, whether similar or different. When working masses are unable to cope with rising inflation, conglomerates and types on top are unable to obtain quality work, forcing them to provide higher compensation for their employees.
Excessive inflation isn’t limited to the lowering of individuals’ purchasing power. Continuous inflation also lowers treasury notes, pensions, savings, and benefits from companies and the government. Inflation contributes to the different variables of the economy and people’s way of life. Businesses across various industries must develop new ideas to cope with rising inflation. Otherwise, these businesses will be built upon high prices and poor marketing strategies that customers will not be fond of.
- Excess Deflation
Right off the bat, “Deflation” is the decrease in price across all forms of goods and services. You might think this is the solution against inflation, as though deflation were the protagonist in saving an economy from a crisis. However, you’d be surprised to know that deflation works similarly to inflation. Excess deflation may cause a supply shock as goods and services will be priced at cheaper rates. Compensation also deflates with cheaper costs of goods, services, and labor.
- Economic Shock
This phenomenon refers to the fundamental change in the different variables of macroeconomics. Economic shocks result in outcomes including and not limited to unemployment, inflation, deflation, economic recession, and others. An economic shock is usually a result of an economic societal event that creates a lasting change in the current economic pattern of a country. These unpredictable events greatly influence how a country’s economy may or may not thrive. One example of a phenomenon that created an economic shock is the COVID-19 pandemic. The ongoing health hazard has made a massive leap in the global economic scale, ranging from deflation to inflation.
- Extreme Economic Debt
Some countries, due to different societal and economic changes, resulting in extreme economic debt. While other countries are able to survive and thrive in a highly competitive market alongside countless societal issues, some countries engage in acquiring debt from neighboring countries. One country that has encountered extreme economic debt is the Philippines, garnering a total of Php 12.7 trillion.
While the Philippines isn’t a loner at having an extreme economic debt, countries like the Philippines are also working on investments and the increase of their gross domestic product. One of the primary industries that contribute to the Philippines’ economic growth is the private sector – namely the Philippines’ overseas Filipino workers (OFWs), the agricultural industry, and the recently booming retail industry, which includes startup and eCommerce companies.
Through these strategic investments by Philippine entrepreneurs, the Philippines is able to accelerate its economy at a competitive rate with other countries. The industries that help the Philippine economy grow better include the startup companies that have emerged in recent years. These new players in Philippine economics are no “new money” they are well-informed and aggressive businesses who offer a great deal to the table.
Focus on What You Can Control an Entrepreneur
From a global perspective, entrepreneurs have been restless about feeling deep concern for the environment and society as a whole than their businesses as a singular aspect. When reality strikes, enterprises are not only affected by a single hit; companies are involved through their manpower, their resources, their expenditures, and other factors. While some of these factors are included in the list of things entrepreneurs can control, some elements are those that cannot be owned by entrepreneurs – no matter the size or strength of their company or team.
There’s no worry about controlling what you can as long as it’s within the scope of your business. Some of these factors that can be included among the things you can control can be your marketing strategy, your virtual office, or perhaps your logistics platform. If you feel that having a physical store constructed for your business isn’t something that you would want to invest in, then perhaps you can try creating a partnership with a reliable eCommerce company that specializes in digital procurement. One notable company that you should consider is Shoppable Business. The company is designed to be at the service of entrepreneurs. Shoppable Businesses place businesses like yours front and center, connecting you with your target market in the easiest way possible.
As you focus on working with the things you can control, this is also the time when you let go of the things that fall beyond your control. “There’s no use crying over spilled milk!” If something can’t be helped, then you focus on the matter that needs your attention the most. Ask yourself about the technicalities, such as “how much time can I work on making this better?” Ask yourself questions like “what resources do I use to make this project work?” As you go along your journey to attending to these matters, see to it that you still work alongside your schedule so that you won’t fall behind your goals.
Other than what is mentioned above, if you are looking to grow your business, then you must be able to strike the right balance in attending to the matters you need to work on and those that are set to drive your goals to tip-top shape. One of the things you can control is the opportunities you take and those that you let go of. Some options come along your way to make you think. Not all the opportunities that knock on your door are opportunities that are good for you. As discussed, these are some of the things that you can control as an entrepreneur.
Speaking of what you can control as an entrepreneur, there’s this notable eCommerce company called Shoppable that you definitely wouldn’t want to miss. They offer tons of tools for eCommerce listing, optimization, free advertisement, logistics tracking, and order fulfillment. Shoppable is the Philippines’ first digital procurement platform that specializes in providing authentic materials and services to its consumers across individual and business-to-business markets.
Here’s why you should join Shoppable…
- It’s FREE – It’s free to start selling on the Shoppable platform. As long as you’re a legally registered business, you’ll be able to list products for free on Shoppable. You only pay a commission if an item sells on the platform, and you get paid.
- Expand your Customer base – Through Shoppable, you’ll reach thousands of new customers for free. Think of Shoppable as your marketing arm that you only pay when you have a sale.
- Get your eCommerce Store – Increase sales by digitalizing your product catalog and reaching customers worldwide. Print catalogs are dying, costly, and not environment friendly – digital is the future. Sellers can get their eCommerce store on Shoppable Business that can be given to any client.
- Procurement Technology – Enable your customers to pay you online through Bank Transfers, Credit Cards, Over-the-Counter Payments, Recurring Payments, and more. Easily track and manage orders, payments, and shipping through the Shoppable platform.
- Shipping Technology – Shoppable has integrated directly with multiple shipping couriers, enabling you to provide same-day to next-day delivery to your customers.
- Compliance – Sales invoices and 2307’s required? Don’t worry. Shoppable has got you covered! The platform keeps sellers fully compliant, never worrying about missing documents.
- 3PL & Fulfilment Services – Need additional manpower? Shoppable can provide you with warehousing and fulfillment solutions so you can expand your brand to different locations enabling you to get products delivered faster to your customers.
- Real Sellers, Real Buyers and Real Products only – We vet and interview sellers that joins the platform so you will be assured that all of the products and transactions are authentic and legitimate.
In a Nutshell
You’re not alone. If you’re having a tough time as an entrepreneur or someone who wants to start a business, know that you’re not alone in forming the company of your dreams, and you’re not alone in addressing the issues you need to work on as a business owner. Even if it’s inflation or deflation, there are things you can do. As expressed earlier, you must focus on the things you can control instead of dwelling on the matters that fall far out of reach.
If working on your business has been challenging because you don’t know where to find your audience, then you can start operating as recommended earlier. Work with a reliable eCommerce partner like Shoppable Business and find your target market easily. Cut the costs of your business by acquiring raw materials from companies that offer their products and services at wholesale prices. Or perhaps, if you are a supplier business, then you can supply your products to other companies through Shoppable Business. Make it your own and brighten the way of your business. Walk on the “yellow-brick road” of business and face the future of your business with your head held high! Reach us at [email protected]!
