Inflation is Here. Plan Ahead and Protect Your Business With These Three Strategies

Author: Brian Hagan, First American Bank Florida Market President


If you’re worried about the effects of inflation and resource scarcity on your business, taking early action to maintain profitability is essential. Here are three ways you can continue success in 2022.

Skyrocketing inflation and resource scarcity prompted by the pandemic are top of mind for many business owners. The spike in material costs and the shortage of goods and labor now coupled with the expected rise in interest rates can have serious repercussions across businesses and industries nationwide.

Fortunately, with foresight and flexibility, business owners can minimize the sting of surging  prices and supply chain bottlenecks. Taking action and remaining nimble amid uncertainty can help you avoid feeling powerless—and poise your business for success.

These three strategies can help you take control of your business and gain confidence about what lies ahead.

Control your materials costs

One of the first effects of an inflationary environment is an increase in material costs. The rising prices of lumber, steel, and other vital materials can put a significant dent in your bottom line when not matched by rising revenue. To maximize gross margins, business owners should look for every opportunity to match variables in their supply chain costs to their revenues.

One critical step is adjusting your customer agreements by locking down fixed prices on longer-term purchase orders. Another strategy you can use is stockpiling inventory. By buying more materials at current prices, you can avoid future, inflated prices.

Drawing on a business line of credit like First American Bank’s Asset-Based Loan*  solution is also a smart way to survive a period of increased costs by paying for a large purchase order and locking in your costs. This flexible line of credit automatically adjusts to the rise and fall of  your inventory. As your assets rise, your receivables and inventory will as well, meaning you can borrow more and ensure supply at known costs.

Adjust your prices

For the companies who pay their sales employees a commission based on company sales prices, it is important to adjust these commissions as your sales prices rise. Neglect to do so could mean overpaying employees and hurting the profitability of your business.

Review your customer contracts and be sure to impose any escalator provisions immediately. Adjusting your pricing upfront on fixed price contracts will also help you avoid the burn of lower gross margins at year’s end. Though customers won’t enjoy higher prices, they will not be surprised given the widespread inflation.

Monitor your overhead 

If your business uses pricing models, you may run the risk of assuming overhead expenses that don’t reflect rising costs. Labor, rent, transportation, interest rates, and even the expense of carrying more inventory—if not correctly accounted for within your cost formulas, could lead you to severely underestimate these expenses. To protect against the rising cost of overhead, carefully review your pricing models to ensure continuing accuracy.

With so much beyond business owners’ control, having a reliable and accessible financial partner is more critical than ever. The dedicated team of commercial lenders and advisors at First American Bank can talk you through important financial considerations and offer tools to keep your business flexible amid ongoing change.

Keeping growing your business. Connect with your personalized banker today.

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First American Bank is a privately held, full-service bank with international expertise. With almost 50 years of experience and 61 locations across Florida, Illinois, and Wisconsin, we aim to create solutions, deliver exceptional customer service and provide unmatched expertise in commercial banking, wealth advisory, and personal finance solutions.

First American Bank is a Member FDIC.


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Drew Limsky

Drew Limsky



Drew Limsky joined Lifestyle Media Group in August 2020 as Editor-in-Chief of South Florida Business & Wealth. His first issue of SFBW, October 2020, heralded a reimagined structure, with new content categories and a slew of fresh visual themes. “As sort of a cross between Forbes and Robb Report, with a dash of GQ and Vogue,” Limsky says, “SFBW reflects South Florida’s increasingly sophisticated and dynamic business and cultural landscape.”

Limsky, an avid traveler, swimmer and film buff who holds a law degree and Ph.D. from New York University, likes to say, “I’m a doctor, but I can’t operate—except on your brand.” He wrote his dissertation on the nonfiction work of Joan Didion. Prior to that, Limsky received his B.A. in English, summa cum laude, from Emory University and earned his M.A. in literature at American University in connection with a Masters Scholar Award fellowship.

Limsky came to SFBW at the apex of a storied career in journalism and publishing that includes six previous lead editorial roles, including for some of the world’s best-known brands. He served as global editor-in-chief of Lexus magazine, founding editor-in-chief of custom lifestyle magazines for Cadillac and Holland America Line, and was the founding editor-in-chief of Modern Luxury Interiors South Florida. He also was the executive editor for B2B magazines for Acura and Honda Financial Services, and he served as travel editor for Conde Nast. Magazines under Limsky’s editorship have garnered more than 75 industry awards.

He has also written for many of the country’s top newspapers and magazines, including The New York Times, Washington Post, Los Angeles Times, Miami Herald, Boston Globe, USA Today, Worth, Robb Report, Afar, Time Out New York, National Geographic Traveler, Men’s Journal, Ritz-Carlton, Elite Traveler, Florida Design, Metropolis and Architectural Digest Mexico. His other clients have included Four Seasons, Acqualina Resort & Residences, Yahoo!, American Airlines, Wynn, Douglas Elliman and Corcoran. As an adjunct assistant professor, Limsky has taught journalism, film and creative writing at the City University of New York, Pace University, American University and other colleges.