November 29, 2022

Business Planning is Becoming More Challenging

By Paul Daniels

The final month of 2022 is a good time to start assessing how your year went. You also need to ask yourself what you want to do more next year and what should be avoided.

As the economy changes, it is more important than ever to look at how your business is doing. Inflation this year is going to affect a lot of companies’ bottom lines if they didn’t pay attention to their costs. Your company might have increased billings by 10%, but if you raised your prices by 8%, then your adjusted growth was only 2%. You’re not growing market share.

A big issue that will affect us all next year is wage inflation. The railroad unions just turned down a new contract to raise wages by over 25%. The social security inflation adjustment was over 8% this year. It may take more than your usual 3 or 5% wage increase this year to keep your staff on board.

When setting sales goals for next year you want to ensure that you are taking inflation into account. It will be more important than ever to make sure that the future business that you are quoting includes time limits on your quotes or escalation clauses based on glass and metal costs. You might want to ask for more deposits on jobs that require custom products so that you can lock in your orders timely to avoid price increases.

Interest rates, gas prices and cost of goods all need to be considered as you plan for next year. These are all issues that will be with us for a while. The pandemic might be behind us, but the new normal is still evolving.