Iowa Businesses Get Scrappy in the Face of Inflation
June 22, 2022
If there’s a silver lining to the rising costs of doing business, it has to be the inspiring true stories of creative solutions from Iowa businesses.
Take one of Bank Iowa’s long-term agribusiness clients, for example. Having started as a local elevator in in the 1970s, the company quickly identified a regional need for better, faster delivery of livestock materials. To meet the burgeoning demand, the elevator researched what it would take to become that better, faster supplier. Shortly thereafter, they expanded the operating model from managing a single facility to today supplying products to farm operations across most of the upper Midwest.
Recently, the nearly 50-year-old company again tapped its culture of reinvention to expand even further—this time taking a more consultative approach to supporting farmers. Using its own experience as a platform, the agribusiness now helps other farming-based businesses find and apply for grants, tax credits and other financial remedies to weather the current inflation storm.
Other stories from around the nation indicate small and medium-sized businesses (SMBs) are not willing to sit still as margins shrink. Bakeries facing rising food costs are adding new lines of business, like food delivery for other local retailers. Manufacturers are shifting production to lines that use supplies (and labor) they can access and afford.
This year, the National Federation of Independent Business found one out of every five business owners believes inflation is their single-most significant business problem. Bank Iowa’s own survey of business clients in February showed 33 percent have made changes to maintain profitability amid rising inflation.
Five Hang-Tough Tactics for Determined SMBs
One-on-one conversations with Bank Iowa business clients have revealed most are mitigating inflation-related risk in one or more of the following five ways.
- Rising prices. In typical “Iowa Nice” fashion, the loyal customers of our clients have accepted higher costs with grace. They read the headlines and know what SMBs have been through. The also trust business owners to bring prices back down as quickly as they can.
- Altering production. Many of the inputs in Iowa manufacturing are at the top of the inflation list. Assigning employees to less-costly lines is alleviating some of the need to continue rising prices for customers.
- Tightening quote timelines. Construction quotes are typically good for 30 days. Some companies are reducing that timeline to 20 or even 10 days to ensure fluctuations in supply costs don’t come back to bite them or their customers.
- Reducing costs. Businesses are looking to cut expenses everywhere, and often that means renegotiating existing agreements with suppliers, distributors and other partners, as well as exploring derivative contract and insurance options.
- Revaluating crisis plans. In 2020, SMB owners developed a new appreciation for how quickly the unexpected can derail operations. Many of our clients are revisiting their business continuity plans and inputting insights from recent lessons learned, including supply chain, labor and pricing complexities.
The innovative, scrappy businesses we are fortunate to partner with report the above strategies are helping their operations not only survive until inflations subsides, but also thrive in a world forever changed by COVID-19. If our team can assist yours in the exploration of options for your unique operation, let us know how we can make it happen.