In our last blog “Political Inflation” we outlined the disastrous economic conditions that have resulted from the profligate spending of Washington politicians and the Biden Administration’s policy related to energy.
As if this situation weren’t bad enough, the Biden Administration submitted their 2024 fiscal year budget request to Congress in early March which called for reduced spending to the tune of - wait for it – zero. Not one cent! So basically, despite the fact that Americans are suffering from the worst inflationary period since Jimmy Carter’s presidency, our elected officials have no intention of curbing their spending. Although I guess I shouldn’t be surprised by this, I have to admit that there was a small part of me that thought we might actually see a responsible approach to our current economic challenges.
What does this tell us? It is yet another indicator that our elected officials have a complete disregard for the pain they are inflicting on the American people. It is also another strong indicator that our politicians are completely insulated from their decisions and few if any of these decisions have an impact on their lives.
This raises the question, what can businesses or individuals do to combat Political Inflation?
Unfortunately, inflation is like a diabolical tax, ultimately eroding value and economic wealth. Unlike some taxes which are avoidable, inflation can’t be escaped. The best one can do is minimize its effects and hope that it is short-lived.
Whether a business or individual, a key strategy in fighting inflation is to cut costs. With nearly two-thirds of American families living paycheck to paycheck (see article) this is easier said than done, however, through a quick review of your existing bills you can likely find expenses that you can manage and lessen. For example, do you subscribe to a cable television or streaming service? How many? Did you know that there are a number of streaming services that offer high quality content for free? If you’re like many, you may very well be subscribed to multiple streaming services a few of which you can certainly live without and this may also be a replacement for cable television.
Do you eat meals at home or are you typically eating out multiple times per week? Today’s schedules can often make it challenging for families to eat home cooked meals. However, doing so is a huge cost saver as compared to dining out. The same is true for lunches. Do you bring lunch to work or do you typically eat in the company cafeteria or outside the office? With most lunches running around $7-$10 dollars, bringing your leftovers can generate substantial savings. (The true cost of eating out)
When was the last time you reviewed and shopped around for insurance coverage? If you haven’t done this in some time, you might be surprised to find that you have more coverage than you need and that you can find coverage from competing providers at a significantly lower price. While this may not be your individual case, each time I have done this, my savings have been substantial.
What about your cellphone plan? Are you obtaining service from one of the major carriers? If you are, you’re likely paying too much. If you live in a reasonably populated area (and even in some rural locations) companies such as PureTalk Wireless and Patriot Mobile offer robust, all-inclusive plans for significantly less than the major carriers. As someone who has made the switch the minor inconvenience I may encounter on occasion is not a problem when compared to the savings I gain each month.
While these are just a few suggestions for individuals, a detailed look at your expenses may ultimately help to identify expenses you can cut and things you can do without. Remember, a small amount of savings over a number of expense areas can really add up.
While individuals can take many of the actions outlined above as a means of lessening the impact of Political Inflation, what can businesses do? As with recessionary times, I am a big believer that businesses are well positioned to invest in internal processes during inflationary periods. Although doing so may seem counterintuitive given the need to spend money, one must keep in mind that not all process improvements require added expenditures.
That said, regardless of the size or type of business you happen to be in, you will need to spend during inflationary periods. The key is determining where you can achieve the greatest value for such spending. While typical business spending is not likely to generate high value, investments in process improvements offer the potential to deliver benefits that will survive long after inflation subsides.
If you haven’t already taken steps towards Digital Transformation, a great place to start is by identifying key departmental or functional processes in your organization and determining which of those, if improved, can deliver bottom line cost savings. (Process Optimization Savings)
For example, does your organization take full advantage of early payment discounts? If not, automating your Accounts Payable process may assist you in capturing such discounts, every dollar of which improves bottom line profit. Not only is this the case, but you may find taking this approach can help you to better manage cash flow and re-allocate employees to more meaningful tasks.
What does it cost you to capture new clients? Do you have an automated marketing approach or are you still conducting marketing based upon what ‘feels good’? Now could be the time to drive further automation in marketing activities and ultimately determine your true cost to capture new clients, but of even greater importance, learn the strategies and tactics that lead to greater success in client acquisition. Again, this approach may not pay immediate dividends, but the benefits of automating this function will accrue on an on-going basis.
Of course, outside of the examples outlined above, all businesses need to consider the impact on internal costs. When doing so, it may be necessary to adjust the pricing for your products or services in order to maintain profit levels and absorb the increased prices for products and labor. Knowing your true cost of product or service delivery will put you in a much better position to make such decisions. If you don’t know these costs, now is a great time to get educated. Again, this knowledge will help you to more effectively manage your business in the long-term and will make your business even more competitive.
Unfortunately, Political Inflation is not something we can hide from. The best we can do is to employ strategies in our businesses and personal lives to mitigate its damage. But Political Inflation doesn’t need to be permanent.
Tired of the Washington establishment? If so, in addition to voting incumbent politicians out of office there is a way to lessen the damage being caused by lifetime politicians. It’s called the Article V Convention of States and it’s a movement of citizens of all political parties who are tired of the status quo. Article V of the Constitution provides a mechanism for the States to call for a Constitutional Convention to amend the Constitution. How do amendments for Congressional Term Limits and a Balanced Budget sound? If they sound good to you click here to sign the Article V Convention of States petition and begin putting pressure on your State legislators to call for a Convention.
May God Bless America!
Next Up: The Debt Ceiling