EconomyInflation, an angel disguised as a devil

Inflation, an angel disguised as a devil

(Expansion) – This has been a difficult year for business ecosystems around the world. And very particularly for the Mexican, in which there is still no light at the end of the tunnel. Since the beginning of the year there has been talk of unprecedented inflation and that, as the months go by, it seems not to give in and each month it surpasses itself. With numbers like these, it won’t be long before there’s a widespread recession or stagflation, crippling the country’s economy at levels we haven’t seen in a long time.

In times of high inflation, the purchasing power of consumers drops considerably. That creates complicated spirals for the liquidity of businesses, it can really put them in check. Not only do their sales drop, they may lose customers who are looking for new options. Little by little, this triggers economic problems that are later really difficult to overcome, but, among this sea of bad omens, is there an opportunity for companies?

Great opportunities do not always come as the easy path or option, the one that is taken without consideration, many times that savior angel comes disguised as a demon, the difficult thing is to find him.

A golden opportunity?

Faced with these highly complex scenarios, there is constant talk that inflation can be a golden opportunity for companies. It helps them outline strategies, test their resilience and put their anti-risk plans in motion. At the end of the day, the Japanese word for “crisis” means both “danger” and “opportunity”; as such, everything will depend on the approach given to a situation as problematic as that of high inflationary pressures.

And what for some is a golden opportunity, for other companies it may well be the final blow. Especially for small and medium-sized Mexican companies (SMEs) that do not have the same capacity to respond to a crisis. Wow, they don’t even have access to the same financial instruments as larger companies to keep their inventories alive and manage them in the face of slow sales and mid-term stagnation.

Not everyone is in the same boat

Very early in the pandemic, it was often said that “we are all in the same boat” in the face of the health emergency. The metaphor was very incomplete. Rather, we were all in the same storm, but some navigated it with warships and others with fishing boats. The opportunities, that is to say, do not present themselves the same for everyone, much less for those who can barely survive.

SMEs face an extremely complex scenario thanks to inflation, but which is also chained to two years of pandemic, from which many companies barely came out ahead with great efforts. According to information from the National Institute of Statistics and Geography (Inegi), in Mexico approximately 30% of companies closed their curtains forever in the first months of the pandemic. Most of them, of course, were SMEs.

Limited room for maneuver

During COVID-19, SMEs survived with limited room to manoeuvre. They digitized dropper and as they could. The vast majority cannot do much more in a 2022 that becomes increasingly difficult for entrepreneurs. The peak sales season is just around the corner—like Buen Fin and the Christmas holidays—but a good proportion of the barely surviving businesses may not make it.

SMEs know how to survive and how to face adverse scenarios. They always have. But their reality is harsher than that of larger companies. And that is something that cannot be ignored: they are the businesses that most require the support of their customers and even their ecosystem.

Every crisis can turn into an opportunity, the key is to channel each and every one of the opportunities, go out and look for more and surround yourself with allies on all sides. SMEs should not be overconfident, they need to prepare for an even more complex scenario because this may not be the most difficult moment in the coming months.

With these weapons in hand, inflation can turn from being the number one enemy to the best friend of SMEs.

Editor’s Note: Bernardo Prum is Director of Creze. Follow him on . The opinions published in this column belong exclusively to the author.

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