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Will Rising Prices Effect Your Business?

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Prices of commodities have been on the rise. There are worries that this might lead to world inflation which will in turn lead to another depression. I am no expert in these field, but speaking from an ordinary businessmen point of view, these rising prices do somewhat effects business. On the short term at least.

I said on the short term because people takes time to get used to sudden increments. During the period of adjustment, business will certainly take a dive. This is normal and might last a month or two before we see people going back to their usual lifestyle. Once they have gotten use to the new prices, they will not feel the pinch.

Price increments of goods, if it is not too big, will not deter people from buying what they need. An increase of 20 cents or 30 cents per plate of rice will not stop people from eating. It is only those who deals with exotic food and branded items that will be affected the most.

Steps to Take From being Affected Too Badly.

Though consumers will be able to adjust to the new prices if it does not differ to greatly, businessmen who has to stock up in bulk will feel the heat. If an item increase by 20 cents, a stockpile of 3 dozen of each item will see a substantial increase in your account payable.

A sensible move will be to cut down on your stockpile and keep payments to your suppliers manageable. People will be definitely buying less during the first few months of price adjustments, so there is really no necessity to stock as much as before. However on the bright side, your old stocks could now be sold with a new price tag. If you have massive amount of those, your balance sheet will be really good looking comes end of the year. On the downside though, there won’t be many people buying until they have got used to the new pricing.

Those in the daily consumable business will not see too much difference. Edibles like flour, cooking oil, and so on are basic necessities. The most they might face will be some curses from their regular customers as if the price increase was decided by them, but that fizzles out pretty quickly when they have accepted the fact.


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