Are you ready to revisit 1985?

My guess is that in the coming year we will start to hear much more about that dreaded word – inflation.  The Clients we work with who live in basic industries are seeing significant price increases come through every day.  These increases are of a magnitude such that they are having a hard time raising prices fast enough to stay ahead of the price increase curve.

The government tells us that inflation is under control, except of course, for those two evil areas of food and energy.  Unfortunately, many of the people we work with are seriously affected by both of these.  Of course there also is the issue with housing and mortgages.  This has a “minor” affect on the construction business as well.

My title for this post is just a reminder that if you didn’t operate a business in the early 80’s, you might want to find someone who did.  This was the time when inflation was running out of control and no one could really increase prices fast enough to stay ahead of the curve.

I’m afraid that we are now quickly moving into a time where the economics of the early 80’s are going to reappear.  The skills that are necessary to operate in a high inflation environment are different than the skills that have been needed for the past fifteen or twenty years.

We will all need to be able react more quickly.  I also believe that for the first few years of our new inflationary economy we will see major resistance from our Customers.  We will need communication skills that allow Customers to understand our increased costs.  After the Customers understand our increased costs, we then will need them to allow us to raise prices.  If we don’t re-learn how to do navigate this process, our business future could be very grim.

I think the name of the game is just to hold on for the ride.  This particular ride might get a little rocky.

Josh Patrick