Welcome to 4Ward Focused, an ongoing collection of stories, insights, and musings geared toward you and your business from your friendly neighborhood credit union. We hope you find this series valuable, perhaps even inspiring! We welcome your feedback and look forward to sharing this journey together.

“Inflation is taxation without legislation”- Milton Friedman

Since 2020, every armchair economist has been talking about inflation. Most would agree that some amount of predictable inflation is good, and most would equally agree that runaway inflation is bad. This is an oversimplification of a complex issue with causes ranging from too many dollars chasing too few goods and services to the overprinting of a nation’s currency. Regardless of the many causes of inflation, the effects are clear. Your money is worthless. What can you do to combat inflation?
  1. Adjust or optimize pricing. All costs a business incurs are not always able to be passed on to the consumer; however, some are. The first step is to know how your business creates a profit margin and then be able to look at what can be done to maintain, increase, or prevent the further eroding of that margin. Good data and good recordkeeping will only help make this easier.
  2. Focus on what made the business successful. Don’t let the temptation of lowering quality to maintain margin win. Long-term strategy would dictate that it is much easier to hold onto customers than to lose them and then try to win them back later. Maybe shrinking margins is a better play in the near term.
  3. Consider outsourcing or subcontracting. Non-core business functions can be offloaded. Now is the time to at least consider whether this makes sense.

Even in the face of persistent inflation, these small moves can yield good results. However, if inflation continues to persist, it will have more dramatic effects on a business's bottom line. Discussing strategies with your trusted financial partners is always a recommended practice regardless of the current rate of inflation.

Announcing Recent Closings:

  • A $250,000 loan was issued to the employee of a print and marketing company to purchase the business from the prior owner. SBA 7a financing was utilized to facilitate the transaction.
  • $100,000 line of credit for a pharmacy to help smooth out imbalances in cash flow.
  • $2,700,000 of construction financing is needed to build new residential condominiums for sale.

Saving our member's money!

Recently, we provided financing for a massage therapist. Over a year ago, she undertook a large expansion, which was funded with a number of short-term, high-interest, and high-repayment loans. Utilizing the SBA 7a loan program and consolidating her debts, we were able to save over $30,000/year while at the same time providing additional capital to complete her expansion.

*This content is for informational purposes only. Conduct your own due diligence or consult a licensed professional before making any and all financial decisions.