Things You'll Need:
- Financial Calculator
- Trade Magazine Subscriptions
- Financial Manager
- Spreadsheet Softwares
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Step 1
Obtain a variety of one-year economic forecasts. Try to gauge the overall inflation rate and the rate of inflation for the specific goods and services your business requires.
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Step 2
Know that inflation won't occur uniformly. Energy prices might soar while prices of other products remain flat.
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Step 3
Evaluate your projected costs and revenues for the coming year. Be sure to adjust them for the effects of inflation, again keeping in mind that the impact on your business will vary with the kinds of goods and services you buy.
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Step 4
Consider raising your prices in order to match projected cost increases.
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Step 5
Cut costs. If energy costs are soaring, look for ways to reduce your use of costly fuels.
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Step 6
Step up marketing efforts. More than ever, you will need to convince consumers that your products and services are essential.
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Step 7
Reduce production of non-essential goods and services, which will be harder to sell during inflationary times.
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Step 8
Keep in mind that your investors will demand higher rates of return during inflationary times. If inflation is at 4 percent, they might be content with returns of 10 percent. But if inflation reaches 6 percent, they might insist on returns of 12 percent.
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Step 9
Consider borrowing money instead of issuing stock. In periods of high inflation, it often is more cost-effective to raise money by issuing debt instead of stock.
