Inflation Incognito--The Monkey on Your Back
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.
C2005 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
