Inflation isn’t linear. While we have experienced rising inflation so far in 2022, we expect disinflation, or inflation at a slowing pace, by the second half of this year. This will offer some relief.
In the April edition of our ITR Advisor™ (included in your Insider™ membership), we advised members that while the war between Russia and Ukraine is contributing to high inflation, it is still necessary to approach the next three years with confidence in an expanding US macroeconomy.
Why? The financial health of both consumers and businesses is still sound, which means we will still see an expanding US economy despite the inflationary headwinds.
This then leads us to a few questions:
ITR Economics provides solutions that together create a well-rounded roadmap from which you can plan with confidence.
ITR Economics has created a way to help our clients better track inflation, and it gives a forward-looking view from which to plan – the Custom Price Index.
How are we able to provide this service?
Now that you’ve established a solid pricing strategy, it’s important to know what your business’ sales will be doing over the next three years. This will help you plan your budget and sales strategies. This brings us to the second part of our 2020s Battle Plan – The Company Sales Forecast.
Just like inflation – your sales are not linear.
To set correct sales targets, labor needs, salaries you can afford long-term, overall budgets, and capital investments, you need an accurate sales forecast. How is ITR Economics able to provide this service?
This is an interesting methodology specifically applicable to this decade of higher inflation.
In periods of inflation, it is normal for your sales trends to be significantly different than your units produced trends.
With this in mind, we recommend that businesses look at both – your sales (for all the reasons listed above) and your units produced. Why?
The units-produced forecast will give you the foresight needed to adequately manage all the factors of production or, if you are not a producer, the costs of carrying inventory. Your sales data may continue to rise due to price changes (identified with the above-described Tool #1), thereby skewing your units-produced expectations.
This Three-Tiered Approach gives you a well-rounded view of
Staying profitable through the 2020s may seem difficult – but it doesn’t have to be.
With the right tools, the right people, and the right information, you have an opportunity to prosper even through what may seem like uncertain times.
Contact an ITR Trusted Advisor today so we can see if our 2020s Battle Plan is right for you!