If you are the owner of a moving company you know how challenging and difficult this can be. True, it is great when your business is picking up and your company is growing fast. In those moments your only worry is to keep up with the high level of service and please your customers. But what happens when bad times arrive? Some happen because of the way you organize your company and others because of global impact. But these are the moments where you show your true leadership and entrepreneurship. Certainly, for you as a business owner, one of the most difficult moments is if your business gets affected by a recession. Only because this is something that is not directly influenced by you. Still, there are ways to deal with it and recover your company. Learn what inflation impact on moving business and how to survive it.
What is it and what are the different types of inflation?
Inflation is an increase in the prices of goods and different services in the economy. Simply said it is the raise in the cost of living in one country. There are different types of services and goods that can be affected by this. Some of those include the increase in prices of household goods, utilities, real estate market, etc. But all these can bring a significant boost in prices in other industries such as the food industry, and undoubtedly the moving industry. When an economical crisis happens it is almost certain that every moving company will feel the effect of it. There are four different types of inflation:
Some of the reasons how inflation can affect your moving business
For some businesses, the recession can have a low impact, and for others, it can be extreme. Some businesses can even benefit from inflation. Still, whether you benefit or struggle, it is certain that your company will change the way of conducting business. According to the Bureau of Labor Statistics, in 2021 the US has encounter the highest month-to-month inflation rate since 2008. Because of the pandemic, nearly all small businesses have contended to adjust to the new prices and support their expenses. if you look at the Verified Movers database you will be able to find more than 18 000 moving companies. And if you compare the prices of the different moving companies for the same type of relocation you will realize how different moving quotes can be. This is because different moving companies deal differently with the economical crises that affected the whole world.
The main one is a supply shortage
One of the biggest problems for the movers is a supply shortage. In order to perform a successful move, your company would need to have quality moving boxes, packing materials, reliable trucks, etc. And inflation can cause these supplies to disappear quickly. The main cause for that can be the big demand, shortage of materials needed to make those supplies, or simply delays with their transportation. Whether your company is specialized in commercial moving or residential relocation there is no doubt that inventory shortage is one of the biggest problems that you may encounter during this economical crisis. According to the Bureau of Labor Statistics survey, these are some examples of how supply shortages affected businesses:
With inflation comes an increase in the material cost as well
But the supply shortage is not the only problem. Even if there are supplies available since the pandemic the cost of buying them has increased rapidly. For example, in the spring of 2021 New York has experienced an enormous price increase in the last 30 years. So even for the top movers in NYC, it became difficult to sustain their businesses and cover all their expenses. On the other hand, overall in the USA, in 2021, 71% of business owners reported a 20% increase in prices for their supplies and other expenses. And since the beginning of the pandemic:
High turnover of the workers and a need to increase wage
Another great impact that recession can have on your moving business is not only supply shortage but labor shortage as well. Due to the raise in the cost of living many people have decided to ask for an increase in their salaries so that they could support their families. This can significantly impact your business as you will have to invest more in your workers. On the other hand, as other expenses are increasing as well, such as daycare, many people have decided to quit their jobs and stay home with their kids. With inflation, you would have to be careful how will you choose to run your business. Either you will have to increase the hourly wage or you will have less staff which can result in poor service.
Do people move less when inflation occurs?
The most current inflation that happened to us was caused by the pandemic of Coronavirus. From that experience, we have learned that there are fewer people moving during the economic crisis. There is no doubt that the main reason for that is because in the moment of crisis people feel safer in their familiar environment. Still, it is certain that the cost of the move is another big reason for people relocating less and less.
For example, California has seen the highest inflation of 5% over the last 13 years. This has significantly affected their housing market. For that reason, there are fewer people that decide to hire one of the cross country moving companies California has and relocate here. To afford an apartment in Sacramento that is on average 1,382$ now people have to make twice the state’s minimum wage. This is the main proof that inflation had a major impact on moving businesses. Not only directly because of the higher expenses but because there are fewer people relocating during the global crisis.
Real estate market during the recession and its impact on moving business
It is certain that the ones that own a home will benefit from the inflation because of the ability to rent apartments at higher prices. Still, because of high real estate prices people cannot afford to relocate as before which directly has an impact on the moving companies. According to the report from 2021:
How can you overcome the inflation impact on moving business?
Even though inflation had an enormous impact on moving businesses there are still ways to recover. For example, top movers in San Francisco found the key to successful recovery from the crisis. The principal is to keep up the high level of service and keep the customers, not to overcharge for your moving services, and to cut unnecessary costs.
Because of the inflation impact on moving business, you might have to raise your prices
Since the beginning of the pandemic, 82% of businesses had to increase their prices and charge more for their services. It is understandable that this can have a negative impact on your customers but this is one of the ways to keep up your business running. In 2021, across the country:
Even though it might look like taking advantage of the global crisis 30% of business owners are concerned that customers will not come back to them because of the price increase. On the other hand, 37% reported that their clients already complained because of the price raise. To keep your moving business running this is one of the most effective ways to do it. Still, do not take advantage of the situation and overcharge as you might lose customers which will bring you to additional losses.
Find a way of reducing your expenses
Another way of avoiding inflation affecting moving business is to try to reduce your expenses. To do that you should take an inventory of your supplies and think about the ones that you could stop using. Also, think if there is any cheaper option to get your moving supplies. Some of the ways how small businesses managed to deal with inflation in 2021 are:
Find a way to retain your current employees
Lastly and probably the most important way to deal with the inflation is to keep your employees. it might seem like a bigger cost at first but those people are the ones that keep your business running. On the other hand, if you constantly change your team you will not be able to keep up with the standards.
According to the Bureau of Labor Statistics and the survey from 2021, 42% of businesses decided to reduce the number of employees because of inflation. Still, 45% of businesses said that they have difficulties finding new employees. In case you have to cut some costs because the global crisis is affecting your business better reduce your supply rather than your team. Don’t forget that people are the ones that make each business unique.
The inflation impact on moving business might be powerful but your business can still survive it
There is no doubt that inflation had an influence on many lives. Not only for businesses but for families as well. In order to keep up with the constant increase in prices, people had to acquire new habits and cut some costs. When it comes to your moving company make sure to make a good business plan and it is certain that you will be able to recover from the economical crisis. Moving business is something that people will always count on. So do not let inflation impact on moving business affect your company and try to overcome all the difficulties that you might encounter.