Those of us who are experienced (and old), understand that inflation isn't only a challenge to running a business but also an opportunity to grow. Every adversity has it's benefits and, in the case of inflation, the biggest benefit is that the cost of using OPM (other peoples money) crashes to new lows.
When prices are stable so are margins and that makes the cost of capital, otherwise expressed as the difference between net proceeds and payoff amount, less affordable. Now that prices are fluctuating (wildly in some cases like energy), Capital costs can actually end up net profitable!
For example, I was able to offer optimal funding terms earlier in the year (Jan-April 2021) to several merchants who then used the proceeds to stock up on materials like lumber (roofers, construction) and food items (restaurants, caterers) as well as pre-ordering fuel supplies (Truckers, transportation). Meanwhile, all of those items have exploded higher in pricing.
The cost of capital in these situations actually made it possible for these merchants to maintain and even increase their profit margins well above their capital costs resulting in a net gain on their P & L reports. There is good reason to believe that inflationary pressures are going to be with us for this year and probably longer, any merchants who qualify for working capital financing have a competitive advantage when shopping for supplies and/or services for their businesses.
It may sound self-serving since, here I am, a lender making a case for taking on more debt. Ok, maybe a little, but even a cursory look at the numbers vindicates my position. If your business is paying 25 cents on the dollar to use OPM but the prices of the items purchased with those funds increases 150% you're doing better, right?
Challenges are certainly increased and so is overall risk when attempting to adjust your business model to new conditions. If I didn't know better I'd say a lot of the challenges are manufactured crises and self-inflicted injuries from the state but they are no less dangerous or risky.
Everyone reading this probably runs a business, I salute you!! There will be even bigger challenges moving forward and now is the time to look at capital as the commodity it truly is. The one who's price remains stable while everything you can buy with it explodes higher.