NINE point six percent. That’s the inflation rate for the month of May, as announced by the Bangko Sentral ng Pilipinas (BSP). It’s the highest since January 1999 when the inflation rate then was 10.5 percent.
Already, we have been feeling the effects of this: the prices of gas, food, and other basic items have gone up steeply. Blame it on supply problems: With lesser rice supply available, its price has increased. With the price of oil running away at more than $130 per barrel, the prices of gasoline and other oil products have likewise hiked up. And as we know from experience, when gas goes up, everything else follows.
Consumers are expected to lower their spending to cope with the high prices of basic commodities. That may mean bad news to businessmen especially those whose products are considered nonessential.
Here are five things you can do to cope with tough times and help keep your business afloat:
1. Do some serious cost cutting. If you’ve been entertaining clients a lot lately, cut down on it or find less expensive ways to do so. If a product line is not viable anymore, cut it off.
2. Rethink your company’s organization chart. If some positions are redundant, or if some duties can be performed by one person, then do what you have to do.
3. Downsize and focus on your core competency. That’s what Malabon-based Victor Gan of Empire Printing Company Inc. and Laser Scanner Center Inc. is thinking of doing. He says they’re at the mercy of their suppliers as well – if suppliers raise their prices, they won’t be able to do much. At the same time, they can’t raise their prices as doing so may drive away customers and make them less competitive in the market. And they can’t afford that right now given their collection problems. Right now Victor is studying where exactly they are strong in, so they’ll just concentrate on that service for the market.
4. Find other suppliers who can give you a better price with the same quality.
5. Hold off expansion plans. The cost of credit is higher now and will be an added burden to you.
The good news is: High inflation is not forever. In time, things will get better.
June 10th, 2008 at 10:48 am
@kenn velasco, here at inquirer.net, the blog network is a useful tool for deepening the discussion out there. this is our way of encouraging people to think hard and care deeply about what is happening in our society. thus, we respect differences in opinion and admire those who are willing to share their thoughts without expecting everyone to agree to theirs.
karen galarpe is one of our most valued contributors. you may or may not agree with what she writes. we respect your opinion. but as one of the editors of Open For Business, I do not think her article was “poorly thought”. She has merely laid down the facts and thoughts she has gathered from her interviews.
we can always agree to disagree and not have to demean each other. take care.
June 8th, 2008 at 11:40 am
nice post. thnx a lot
June 7th, 2008 at 3:20 pm
your article seems to be advertising for the two firms mentioned. It find it unethical.
True strategies are the following:
1) hedge against inflation by contract buying. for example, you can already contract our your christmas give-a-aways.
2) purchase fixed assets now. Fixed assets have lag effect. eg. computers, furniture, appliances.. the domino effect of a push-cost inflation situation (as we have today with oil prices rising) will eventually push the prices of fixed assets. so buy they now. don’t delay.
3) unload cash.. convert them into inventory.. buy more office supplies, toners, paper, etc. cash will lose its buying power.
4) prepare to pre-pay loans. eventually the bsp will try to temper inflation by raising interest rates.. if you have an outstanding loan..you may want to pre-pay the loan now..when the interest adjust you can reduce your principal.
5) lock into low-long term interest rates.. If you find a bank willing to lend you money on a fixed low interest rate.. take it.
6) invest in energy saving devices to reduce cost.. aircons with timers, low wattage bulbs, air coolers instead of airconditioners. You may want to adjust officer hours from 8 am to 5pm to take advantage of natural lighting.
7) initiate a Carpooling system at your building. people who drive can give people a “lift.” assure safety and convenience for the car owner.
7) hedge against inflation by converting cash into commodities eg. stocks(yes,, its the best time to buy for long term holding), gold/jewelries, etc.
i wish your editors would prevent such poorly though articles as such written by Kare Galarpe… laying off people will exacerbate a recession.. cost cutting is an integral business strategy.