MBA2007 How To Combat Inflation as Business Owner + Free Ride Friday

Let me tell you about Intuit QuickBooks. When I was starting out my business, I remember sitting at my desk late at night not working on my business but cleaning up numbers, tracking and reconciling payments and wondering how this became my life. But once I automated the admin side of things of my finances, those nights had disappeared and I felt a whole lot better. Outdo it with intuit QuickBooks QuickBooks is the trusted end to end solution that businesses rely on for getting paid, managing finances, paying employees, finding new customers, and more. QuickBooks provides a team of AI agents and trusted experts, so doing it yourself no longer means doing it alone. Their payment agent gets you paid faster, their customer agent finds leads, follows up and secures more sales, and the accounting agent automates and categorizes transactions. Get your critical business jobs done with QuickBooks on the Intuit platform. Ready to save on new tech? It's time for Dell Tech Day's annual sales event celebrating our customers with fantastic deals and benefits. Perks include Dell Rewards, free shipping, premium Support and more. PCs like the Dell 14 with Intel Core Ultra processors will help you do more faster and with a premium suite of monitors and accessories, you can upgrade your whole setup with amazing savings. Visit Dell.com deals. Hey oh welcome to the Hundred Dollar MBA Show. A better business begins with you. That's why we deliver daily 10 minute business lessons for the real world. I'm your host, your coach, your teacher Omar Zenholm. I'm also the co founder of Webinar Ninja, an independent software company I started with my co founder back in 2014 and today is Free Ride Friday. On Free Ride Friday, we give away a lifetime membership to one of our programs. If you want to win a free ride, just leave us an Apple Podcast rating and review and you enter our weekly random draw. It's that simple. Listen in on Friday, just like today, to see if you won. It's our way to say thanks for showing us love on Apple Podcasts. In today's episode, you will learn how to combat inflation. As a business owner, if you haven't noticed, things have gotten expensive. Inflation is up 7.5% globally in 2022. It's 7.9% in the US which is a 40 year high. This is a big deal because if your profit margins are thin, this is not going to leave a lot of breathing room for your business. So what can you do about it as a business owner to make sure inflation doesn't tank your business? In today's episode we explore all the options you should definitely consider what are the next few moves you need to do to make your business is just not another casualty that inflation causes this year? So let's get into it. Let's get down to business.

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Guys, inflation is inevitable. This is going to happen. Some rate of inflation will always occur every year. But where you need to worry is when inflation is so high as it is these days. Why? Because when inflation happens normally, it's gradual. And you have the luxury of time to grow your business and compensate for the losses of inflation. For example, if inflation is increasing at 1.5% every year, you have a few years to do something about it and make more money to compensate for that increase in inflation year after year for a few years. But if it happens all at once like it's doing right now, you don't have much time. So today we're going to talk about some immediate action you should take right now to make sure inflation doesn't rock the boat in your business, as well as some long term actions you should take to help make sure your business can survive even a further increase in inflation, as some experts are predicting. The first thing you need to realize is that when inflation happens, the buying power of your dollars decreases and therefore a lot of companies will raise their prices because they have expenses, right? They have to pay for their own expenses in the business, so in order to compensate for it, they'll raise their prices. Now, this doesn't actually happen immediately when inflation strikes because many companies move very slowly and a change in price often takes time. But this is to your advantage. Why? Because you have expenses, okay? And a lot of us in business, we have fixed expenses that we have to pay month over month, whether it's rent for your office or for your storefront, or for web hosting or utilities, you name it. So the prices that you're paying for these things right now are not going to stay the same for very long. So you have a window of time now to lock in that price. So go to your biggest expenses, right, and see if you can secure a long term contract under this price. For example, one of the biggest expenses we have as a software company over at Webinar Ninja is our computing power. We have a contract with Amazon Web Services. These are our servers that run our software company. And we pay a certain rate for computing power. Now, a smart thing to do if you're a company like ours is to reach out to them and say, hey, we want to lock in this rate for the next two years, three years. And even you can request a discount because you are locking in. It doesn't mean you have to pay up front, but it means that you do lock in a contract. This can work for other expenses like rent, like other utilities, like Internet bills, whatever. Your big expenses are for your business. And by doing this, you're locking in your expenses so that you're not affected by the price increase that will happen later on because you got a contract. Now on the flip side with your customers, you should do the same. If you have any kind of membership, that is monthly or annual payments, lock in annuals as much as you can get your customers who are on monthly to commit to an annual price. So that way you can secure those funds and weather any storms that may happen. Meaning they might cancel your month to month service if things get rough, if they're looking to cut expenses. So even discounting your annual plan or your annual upfront price might benefit you in the long run to not losing that customer in the next year. Even if you sell products like E Commerce and it's a consumable item, Amazon does this. So say, for example, you are selling something that people use over and over, like shampoo, instead of selling that shampoo for $30 a bottle. And you've noticed this person buys this shampoo every month. Say, hey, I'm going to send you a bottle every single month for the next year for $300, you're going to save $60. That means you're going to get two bottles for free. Many people put these things on their credit card anyway, but for you, you secure the cash flow because they're paying upfront. Now, these are some immediate strategies you can do, but a long term strategy that you should really think about. And this is a good time to think about it. With inflation being so high, is really becoming a product of or a service for others that's indispensable. It's the last thing they're going to cancel. Think about your own personal expenses. What are some things that you're just not going to cancel even when things are tight? Probably your Netflix account, because for $12, $15 a month, you get a lot out of it. And probably one of the first things you'll cancel is probably eating out or going to the movies where one night will cost you three or four times as much as what you pay a month for Netflix. This is the type of extreme value that Netflix offers. But better yet, if you become something even so integral, even if it's not a great value, even if it's not an inexpensive purchase, it's so integral to somebody's business or life, they don't cancel it. For example, I talked about web hosting, okay, if you have a website, the last thing you're going to cancel is the web hosting where your site is hosted. Because without it, you people can't find your website, they can't get to your website. You're not going to cancel your website. You might cancel other services, other tools, but your web hosting, you're going to keep it because you need that to keep your business alive. That's an indispensable product. So start thinking about how you can make your business, your product, your service, indispensable. Something that just doesn't make any sense to cancel. How do you get closer to that state of mind? How do you, how do you get closer to becoming a product that people get so much benefit from it, they would lose if they canceled your service or your product. The reason why a lot of people buy housing bonds as an investment is because most people do not default on their mortgages. It's the last thing they would not pay. They'll pay their mortgage before they buy food. Now, of course, like we know, like we learned from Nicholas Taub from the Black Swan, events like that do happen, like the housing crash that happened not that long ago. But we're talking about relative, right? Relatively speaking, people pay their mortgage compared to paying for luxury items. Now, for any reason, you can't turn your product to an indispensable product or service. Many businesses, what they do is they move up market. If your business is charging low prices and it's Losing customers because of inflation. Maybe it's time to consider that changing your model and catering to people that have bigger budgets. We talked about this before in the shows. But there's a reason why when there are economic depressions, companies like Louis Vuitton, Mercedes, Bentley, high end real estate, they don't really get affected. They're not playing in the same market as the majority of people that are in the middle class. They're catering to people that have a level of wealth where it doesn't really matter what the inflation rate is. They still can afford things like that. So moving up market or moving to enterprise or catering to a different type of customer might be a pivot you might want to consider Gas, snacks, tolls. This trip is draining my wallet.

Yeah, but we'll be with family.

You're in a good mood.

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Get that more for your money feeling only at Metro by T Mobile.

Just bring your number.

$30 first month and $25 after with.

Autopay not available if with Metro or.

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To wrap up today's lesson, a high inflation rate is not something for you to be afraid of. It's something for you to be aware of so you can make the right moves for your business. I've been an entrepreneur for 20 years and I've seen the economy go up and down and sideways in all different directions. And I gotta tell you, you can't just sit complacent. You have to react to the way the economy is acting. You have to prioritize protecting your business, doing the right thing for your business, and planning ahead so that you're not flat footed. This is why I thought it was really important to record today's episode. But this is not something that should scare you. I know you are resilient. I know that you're hardworking and I know that you know this is par for the course as an entrepreneur. Thanks so much for listening to the 100 MBA Show. Today's episode's not over though. It's Free Ride Friday. Let's see who won this week's Free Ride. And the winner is Sabretooth Rex. That's the handle on Apple podcasts. Sabretooth Rex says the Drive to Work five stars. I listen to this podcast on my way to work every single day. Keep the goods coming. Well, thank you Saber Tooth Rex. We will keep it coming. Your mission is to email me over at omar@100mba.net so we can hook you up with our lifetime membership to the Automated webinar challenge, our $99 course showing you how to automate your leads and sales with automated webinars in 30 days. If you want to win a free ride, just leave us an Apple Podcast rating and review right now and you enter our weekly random draw. Listen in on Fridays to see if you won. It's that simple. Before I go, I want to leave you with this Generally speaking, when inflation is high and prices are going up, generally speaking, not only with your own personal expenses but with your business expenses, it's a time to be a little bit frugal. You don't want to spend too much. It's time to reel it in a little bit. Rein in the horses. Because often inflation that is quite high will start to level out after a few months or a year. I'm not saying don't spend money at all, but just be a little bit more critical about how you open your wallet or how often you open your wallet and spend on your business. Again, we're looking for profitability. High profitability. Thanks so much for listening and I'll check you in Monday's episode. I'll see you then. Take care. Gas, snacks, tolls this trip is draining my wallet.

Yeah, but we'll be with family.

You're in a good mood.

What's your what's my deal? I saved at Metro with no activation fees and I got one line of 5G for just $25 per month. Kept the phone I love and a 5 year price guarantee on my top tuxt and data detour to Metro.

Get that more for your money feeling only at Metro by T Mobile.

Just bring your number $30 first month and $25 after with autopay not available.

If with Metro or T Mobile in the past 180 days.