No one, I’m sure, was thrilled to learn wholesale prices have surged more this last month than at any other time since 1981. That was a long time ago, 1981, so the sudden 1.2% increase in wholesale prices has given the jitters to everyone. Prices have increased almost ten percent over the past 12 months. The stock market has the usual summer jitters plus some extra nervous twitches.
I am reminded of the old classic Three Stooges comedy routine, where the Stooges shout to each other, “Don’t panic, don’t panic.” A few minutes pass, things get worse and the Stooges shout, “Now you can panic.” Well, maybe no one has hit the panic button, but more than a few have been eyeballing it with greater frequency.
So as a business owner or senior executive, here comes the big question–do you raise your prices or hold steady? It’s a tough decision, considering most of your clients may well be hurting and raising your prices may cause them to either order less or go shopping for better pricing. But then incurring the added expense due to inflation can bite big time into your profit margins. With your own expenses increasing in other areas you can hold out for only so long.
The other thing to examine is to see if among your expenses that you are not carrying any employee dead wood. This is not the time for charitable behavior. Well it is if you have a good, competent and loyal staff that you believe in carrying through the hard times. But if your employees are confused and mistake their job for an entitlement program, then may it is time to offset your increased expenses by letting them go.
There is wisdom in this move. Let’s face it, you have to trim somewhere, and sometimes the smart move, as the saying goes, is not is raising the bridge but lowering the water. Look to trim in other places and perhaps saving raising prices for last. You are justified in letting people go because of an economic downturn. You are equally justifying in redefining your job criteria and then hiring people who would prove more skilled and a better fit for your new recruiting needs.
It’s a tough call, either way. But what isn’t anymore? If you raise prices, you risk alienating your clients. If you maintain your pricing schedule, you suffer losses that sooner or later you won’t be able to absorb. So, before you do anything, reevaluate your preemployment screening process and see what type of people are best accommodated to the current business climate and then take a look at your pricing. It might be a mix and match that makes the best sense.
Check them out before you hire.
