[PODCAST] How to deal with the effects of inflation on SMEs
Posted: Wed Dec 18, 2024 8:30 am
In this episode of the Sage Advice Podcast, “Business management as the key to success” , Joan Boluda interviews Lluisa Ochoa, Tax Consultant at Ochoa Asesoría Fiscal, to talk about automation as a fundamental tool to curb inflation.
Lluisa Ochoa stresses the importance of SMEs being aware of their production processes in order to optimise resources and increase their profitability, a key factor in combating inflation.
Process automation is a fundamental element to be more competitive and, in this way, to be able to increase our productivity, performance and benefits.
Recently, I had the pleasure of interviewing Lluisa Ochoa , PhD in Financial and Tax Law, professor, author, advisor, and Tax Consultant at Ochoa Asesoría Fiscal. During our djibouti email list interesting conversation, we were able to learn more about what inflation is , a great unknown even today for many business owners and self-employed people, as well as what actions we can take to fight against it.
Start of marked textTWEET IT! In this episode of the Sage Advice Podcast we talk about inflation: what it is and how to combat it from an SME perspective. Don't miss it!End of marked text
Lluisa also highlighted the importance of small and medium-sized businesses in our country beginning to automate processes , which will allow them to optimize resources and increase their profitability , a key factor in combating inflation.
As consumers, we can also help to curb the effects of inflation by restraining ourselves from buying certain services or products and not accepting the increase in their prices. If we continue to buy them, even if prices rise, we will not be able to curb inflation.
What is inflation?
Inflation is a very basic concept that many small and medium-sized businesses, self-employed people and ordinary people do not fully understand. But what is inflation and why should we know about it?
As Lluisa tells us, in colloquial terms inflation is a disorder of the entire economic cycle . A kind of loop that the economy of a country enters and that makes all the goods and services of the economic cycle increase their cost without any kind of control. Prices rise due to a disorder, without there being a single and exclusive reason, and not because anyone decides or establishes it voluntarily.
Thus, a number of triggering factors, sometimes understandable and sometimes not, suddenly come together and cause prices to rise.
How can we stop inflation?
At both the personal and business level, we can take actions to combat inflation. In both cases, we can use the tool of containment . That is, not buying goods and services whose prices have increased considerably.
But, at a business level, how does inflation affect companies and what should we take into account to fight against it? According to Lluisa, “in companies, the phase of awareness has arrived ; it is time for SMEs to become aware of what their products are, what prices they have, what expenses they incur, and from there arrive at the optimal product so that the process is orderly again. In other words, we must know what the exact cost of what we produce is .”
What cannot happen is that there are companies that lose more as they sell more. This happens because they do not know the real cost inherent in the sale of their products or services. It is not about reducing expenses, it is about putting the profit in its proper measure in each product, and if we lose money on a product we should know it and admit it, and see if it is worth offering said product or service.”
The importance of having an economic conscience
No business can afford to lose money in order to sell more. This requires an economic awareness that unfortunately is not abundant in small and medium-sized companies in our country. An awareness that makes us analyze the production process in depth and see where it can be improved . For this, there are solutions such as Sage Active , which allow you to analyze a business by understanding its basic data: profitable budgets, sales, cash flow, expenses, VAT to pay... in order to be able to make decisions based on real-time data.
Many companies act by directly passing on an increase in their costs to the price of the products they sell, increasing them. This only contributes to increasing inflation and therefore making the situation worse.
It is very important for business owners to consider whether traceability and the production chain can be improved to maintain profitability or even increase it, but without this affecting the price of their products or services. The solution to the increase in costs and the reduction in the profitability of an SME does not always consist of increasing prices, but rather we must find a way to be more efficient. A fundamental tool to be able to carry this out is process automation , thanks to which we can reduce costs significantly and thus be able to offer the same product at the same price thanks to the improvements in the optimization of the production process.
Lluisa Ochoa stresses the importance of SMEs being aware of their production processes in order to optimise resources and increase their profitability, a key factor in combating inflation.
Process automation is a fundamental element to be more competitive and, in this way, to be able to increase our productivity, performance and benefits.
Recently, I had the pleasure of interviewing Lluisa Ochoa , PhD in Financial and Tax Law, professor, author, advisor, and Tax Consultant at Ochoa Asesoría Fiscal. During our djibouti email list interesting conversation, we were able to learn more about what inflation is , a great unknown even today for many business owners and self-employed people, as well as what actions we can take to fight against it.
Start of marked textTWEET IT! In this episode of the Sage Advice Podcast we talk about inflation: what it is and how to combat it from an SME perspective. Don't miss it!End of marked text
Lluisa also highlighted the importance of small and medium-sized businesses in our country beginning to automate processes , which will allow them to optimize resources and increase their profitability , a key factor in combating inflation.
As consumers, we can also help to curb the effects of inflation by restraining ourselves from buying certain services or products and not accepting the increase in their prices. If we continue to buy them, even if prices rise, we will not be able to curb inflation.
What is inflation?
Inflation is a very basic concept that many small and medium-sized businesses, self-employed people and ordinary people do not fully understand. But what is inflation and why should we know about it?
As Lluisa tells us, in colloquial terms inflation is a disorder of the entire economic cycle . A kind of loop that the economy of a country enters and that makes all the goods and services of the economic cycle increase their cost without any kind of control. Prices rise due to a disorder, without there being a single and exclusive reason, and not because anyone decides or establishes it voluntarily.
Thus, a number of triggering factors, sometimes understandable and sometimes not, suddenly come together and cause prices to rise.
How can we stop inflation?
At both the personal and business level, we can take actions to combat inflation. In both cases, we can use the tool of containment . That is, not buying goods and services whose prices have increased considerably.
But, at a business level, how does inflation affect companies and what should we take into account to fight against it? According to Lluisa, “in companies, the phase of awareness has arrived ; it is time for SMEs to become aware of what their products are, what prices they have, what expenses they incur, and from there arrive at the optimal product so that the process is orderly again. In other words, we must know what the exact cost of what we produce is .”
What cannot happen is that there are companies that lose more as they sell more. This happens because they do not know the real cost inherent in the sale of their products or services. It is not about reducing expenses, it is about putting the profit in its proper measure in each product, and if we lose money on a product we should know it and admit it, and see if it is worth offering said product or service.”
The importance of having an economic conscience
No business can afford to lose money in order to sell more. This requires an economic awareness that unfortunately is not abundant in small and medium-sized companies in our country. An awareness that makes us analyze the production process in depth and see where it can be improved . For this, there are solutions such as Sage Active , which allow you to analyze a business by understanding its basic data: profitable budgets, sales, cash flow, expenses, VAT to pay... in order to be able to make decisions based on real-time data.
Many companies act by directly passing on an increase in their costs to the price of the products they sell, increasing them. This only contributes to increasing inflation and therefore making the situation worse.
It is very important for business owners to consider whether traceability and the production chain can be improved to maintain profitability or even increase it, but without this affecting the price of their products or services. The solution to the increase in costs and the reduction in the profitability of an SME does not always consist of increasing prices, but rather we must find a way to be more efficient. A fundamental tool to be able to carry this out is process automation , thanks to which we can reduce costs significantly and thus be able to offer the same product at the same price thanks to the improvements in the optimization of the production process.