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THE TROUBLE WITH BUSINESS
It’s Real and it’s Here Central Minnesota businesses are getting creative to combat inflation. By Ari Kaufman
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or well over a year, inflation has hindered American and global businesses. A recent U.S. Chamber of Commerce survey revealed that nearly 90 percent of small businesses surveyed expressed concern about inflation, and one-third listed it as their top concern. With no quick end in sight, business owners should prepare for inflation, understand how it affects a small business, and discover creative ways to manage it.
government spending and results in rising costs, short supply, and long wait times. Even top economic thinkers struggled to forecast the economic machinations of the past few years. As the economy has slowly rebounded from the COVID-19 pandemic, leadership within various Minnesota companies have been faced with the rising costs associated with inflation, a looming threat of recession, political turmoil, and continued supply chain issues.
Inflation Defined In essence, inflation occurs when the cost of goods and services increases rapidly, or prices rise as a currency’s purchasing power over time declines. It can be triggered by a shortage of products or excessive
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hold price guarantees for more than 10-15 days,” Johnson, who founded the company 35 years ago, explained. “If we are already under contract with projects and have a price increase, we are not able to increase our costs, so we end up eating the upcharge.” Dennis Host, vice president of marketing and communications for Coborn’s, said the company is working diligently to keep prices on the shelf down for consumers, even though many upcharges happen before products ever reach the store. “Grocery prices have increased significantly thanks to many factors including continued price increases on packaging materials, labor shortages, transportation challenges, wage pressures, fuel increases, shortages of raw ingredients, food manufacturing plant closures, supply chain issues due to the war in Ukraine and on and on,” Host said in late October. “All those cost challenges aggregate and ultimately get passed down to the very last link in the supply chain, the grocery operator – a business with razor-thin operating margins, even on our best days.”
Combating Inflation Local Impact Kevin Johnson, owner of K. Johnson Construction in Sauk Rapids, says inflationary price increases have been challenging. “Our suppliers will quote projects but are unable to
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John Waletzko is president of Bradbury Stamm Construction. Based in Central Minnesota, he’s been with the company a decade overall and has run the upper Midwest region, with its 25 employees, for the past year.
Early procurement scenarios and “value engineering” with clients have been a focus, according to Waletzko. “By no means have we been spared supply chain woes or inflation – we’ve most definitely been tagged with both,” he explained. “The biggest things we’ve been able to do are early procurement methods. One of the biggest issues is being pigeonholed into certain supplies because of their lead time. We’ve pushed and doubled down so that when we bid on these projects, we can talk to the widest array of suppliers to gauge availability and still have a competitive bid process.” Johnson noted a similar tactic in his industry, but one that eats up cash flow. “Our solution is to pre-buy materials that have been volatile,” Johnson said. “We have also been pre-buying supplies and products that have long lead times.” Coborn’s is also taking a creative approach. “We are doing our best to stabilize prices and bring our guests more value and deals to save them money,” Host said. “We’re working very hard to press manufacturers and vendors for better deals.” Coborn’s has also beefed up its coupon programs. They brought back the “Penny Pincher” promotion, added more digital coupon offers, more Price Cut tags on items in the store, and more MORE Fuel Rewards items to help customers save on