11/09/2023
How can Kenyan businesses deal with inflation?
Kenyan businesses have been facing challenges due to inflation over the past year. There are a few ways they can cope with economic crises and uncertainties: -
1. Be adaptive- Being adaptive and staying nimble is a key to coping with changing times. Businesses must consider revising their pricing strategies to stay afloat during high inflation. Try to increase prices based on increased supplier costs rather than rising prices of all goods on board. Do competitor's price analysis and market survey, then decide on the right price. For example, if you are increasing the price, add a service or value to the current product or service to persuade your customer to pay the higher price.
2. Efficiency in cash flow- Keep a bare amount of cash float to preserve the buying power and convert month-end balances into other currency or invest in capital assets. When the Kenyan shilling is losing value against the dollar, it is good to have a dollar account to transfer the month-end balance to protect the purchasing power of cash.
3. Consider making long-term relations- One way to avoid rising supply costs is to enter into long-term contracts at current rates. This way, your business will not be affected by global inflation and price changes. It's also advisable to buy in bulk to leverage costs. For instance, if you sell products that need fixed size and shape packaging, buy in large quantities to get higher discounts.
Look for ways to cut costs to bring efficiency, which would help a great deal to combat inflation.
4. New clients and networking- Another way to weather your business through inflation is to look for new clients in areas that you never tried before. Some owners who have been in business for more than two decades still haven't digitized themselves. Use 'Google my business' free tool to make your business visible online to new customers. Networking with different business groups and collaborating with similar business owners is a way to get through the economic crisis.
However, the ultimate goal should be growth rather than merely surviving the current economic crisis and inflation.
