Last Updated on Oct 10, 2022 by James W
Inflation is a worldwide phenomenon and businesses in all domains and around the world struggle with it. Manufacturing companies are no exception. In fact, new ones counter endless problems due to inflationary pressures. The rising cost of raw materials, energy, and labor are the most daunting factors they face. While the challenge sounds big for startups, it is easy to address it with a cost-cutting approach. Moreover, you can use some creative strategies to minimize the impact of inflation on your operations and bottom line. Here are some tried and tested ones new manufacturers can rely on.
Save every dollar you can
The simplest solution to keep your new manufacturing enterprise afloat is to save every dollar possible. Fortunately, you can find more opportunities than you can imagine. Reduce wastage and inefficiencies, cut energy bills, seek discounts on raw materials, and stay ahead of maintenance schedules for machinery and equipment. Hire efficient employees and ensure they deliver top levels of productivity, even if it means spending on training and tools.
Consider hiking product prices
New manufacturers are often hesitant to raise prices and end up missing pricing opportunities even when they have them. You must capitalize on market demand if you have unique offerings or operate in a low-supply market. Investing in startup marketing is a viable way to gain popularity and visibility. Once your target customers know your USP, you are in a good place to win the price point. Consider hiking product prices because buyers will be ready to buy despite inflation.
Find additional revenue streams
Besides lowering costs and hiking product prices, you must look for additional revenue streams to enhance your income. It is perhaps the wisest way to reduce inflation’s impact on manufacturing because you end up adding to your revenues for a lifetime. You can continue generating additional revenue even after the inflationary phase is over. Consider measures like selling used machinery, repurposing wastes, and finding new markets to add more revenue streams.
Prioritize the most profitable products
Prioritizing the most profitable products is a smart way to beat inflation if your manufacturing unit has a diverse product line. You can research the market, follow the sales trends of competitors, and keep an eye on your sales figures to identify the bestsellers. Once you nail them, you can invest your resources in the profitable segment instead of using them for low-performing ones. You save resources and earn more profits, which works both ways to reduce the inflationary impact on your business.
Automation is the best investment for a manufacturer, and it is never too early to start. Consider embracing automation as a startup, even if it entails some investment. It reduces the dependence on the human workforce, minimizes errors and wastage, and ensures the quality and consistency of products. The good thing is that manufacturing automation solutions are more affordable than you imagine, so you can adopt them without worrying about inflation and startup budgets.
Handling inflation is doable for manufacturers, even at the startup stage. Follow these simple measures to stay ahead of rising prices and boost your bottom line.