Stagflation happens when inflation exceeds economic growth, causing a “stagnant” environment.
GDP increased 2.1% in 2022 after increasing 5.9% in 2021. While inflation recently peaked to a 40 year (12 month increase) high in June of 2022, coming in at a whopping 9.1%.
Back in the good old days most companies offered their employees what was called a “cost of living” raise to offset a 1-3% increase of living expenses annually.
Both the private sector and government employees would see this in some way, shape or form. It wasn’t always in the paycheck; it could’ve been in the form of an expense a business was going to incur on behalf of staff.
I can tell you, as a company I’d adjust our labor rate according to what the industry allowed at a pace that afforded the opportunity to pass on some of the increase to the employee and to remain competitive as well.
When you assume the role of a business owner, most believe it to be glamorous. I can tell you it’s NOT! Not only do you work for your clients, but now you work for your employees, vendors and even the government.
These days, it’s important to continue to offer your clients the very best value you can and to be as generous as you can be with those who work with and for you.
The trickle effect is everywhere. There’s no one who isn’t feeling this!
I had a client last week do some work on their older vehicle. The job likely exceeded the value of the vehicle, but in his eyes the car is worth keeping on the road as it would be unaffordable to replace.
When you venture into repairing an older vehicle, I encourage my clients to look at it in the manner of: if the cost of the repairs buys me X amount of time, I’m ahead of the game because I wasn’t making a $600 car payment.
While the repair was $1200, the car was only worth scrap if it wasn’t running. He approached me several times expressing concern about investing in it. My answer was simple: don’t fix it if you’re uncomfortable.
I look at it as if $1200 buys me 2 months of reliably operating the vehicle, I’d be ahead of the game come month 3. Having no car payments is a beautiful thing!
What he was after was a discount. Because it’s an older car in his eyes, he saw it as a hard decision to repair it.
Repeatedly I explained to him that if my business partner is going to take his time to work on it and we have to purchase the parts needed to do the job, that all comes at a cost.
Our time and the cost of the part aren’t worth any less because of him being unsure about doing the job. Ultimately he authorized it and his comment when writing the check was, you didn’t even save me a penny.
And my answer was: every aspect and component of our overhead to exist doesn’t offer us even a penny of discount. Needless to say, that was the end of that conversation.
The moral of the story is: don’t beat up small businesses over their price. Ask for an estimate, decide if you’d like to work with them not only in the immediate moment, but in the future as well and be decisive.
You want that auto mechanic, plumber, electrician, HVAC guy to want to answer your call next time you need them. Because if you don’t value them, they will value someone else over you next time you’re in need.