Inflation Incognito--The Monkey on Your Back
by Susan Kirkland
Published on this site: May 17th, 2005 - See
more articles from this month...
Domestic stock funds were down 2 percent in the first quarter of
2005. Mutual funds and bonds, on average, lost value; but this is
not the first sign of inflation. Companies in almost every industry
have been twisting and turning within the confines of the law to
cover losses due to the growing cost of doing business. Almost every
commercial endeavor is affected by the rising cost of fuel and labor.
From shipments of raw materials to delivery of the finished product,
the cost of doing business in an oil driven economy is pushing the
creative limits of operations managers worldwide.
And just how creative can they get? Here's an example that's close
to home; review the cost of fees on a line of credit. There is a
fee for paying late, a fee for exceeding the credit limit, a fee
for exceeding the cash advance limit don't forget the higher percentage
fee on the account as a whole the first time payments are a day
late. Thinking of switching one balance to a different, lower rate
card? The small print allows all your cards to raise their rates
if you are late paying one card. Credit cards used to encourage
customers to exceed their credit limit because it was good business
to get them to take on more debt. Now the same excess is going to
cost hard cash.
Business is recouping these hidden inflationary losses by adding
and increasing fees to almost every step of daily commerce. This
creative sleight of hand has helped overcome thinning margins but
at the same time, prevented economic analysts from recognizing and
dealing with the true culprit inflation. As inflation attacks narrowing
profit margins, watch vendors add fees to cover the cost of doing
business. The latest trend; handling charges on orders to offset
fuel and labor costs. To the merchandise total, add sales tax, shipping
and an inflationary cushion fee called handling. This transfers
some of the cost of doing business to the end user and reduces cash
outlay
except for what's lost from customers who won't tolerate another
fee. Inflation has been with us for quite some time; it was just
in disguise.
Susan Kirkland, veteran small business owner and author
of Start and Run a Creative Services Business, shares the secrets
to finding and keeping clients, negotiating with vendors, protecting
yourself from
scoundrels and scalawags a valuable resource for everyone, no matter
what line of work. For more information creative points of view,
visit www.sdkirkland.com
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