The Lazy CEO Podcast

Inflationary Economics

by Dec 12, 2022The Lazy CEO Podcast

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A glimpse of The Lazy CEO Podcast: Inflationary Economics

  • Jim Schleckser shares his must-do advice for CEOs in an inflationary environment
  • Moves to make on the cost side and price side of your business
  • Pricing elasticity to ensure your increasing at the right rate
  • Competitive, market, and supplier analysis

In this episode…

Box out, and make room for the strategic moves needed to stay profitable in an inflationary environment.

Today we’re going to talk about dealing with unpredictable markets and specifically inflationary markets. Specifically, we are going to talk about two options, do nothing, or do something, and then what can you do.

If you do nothing about this environment, you are assuming it’s transitory, it’s going to pass, no big deal. But both material costs as well as labor costs going up. And if you’re not doing anything, your prices are remaining the same and you just are going to get caught in the squeeze, the margin is going to shrink, and profit is going to shrink. This is obviously a long-term problem for survivability. If inflation carries on at this rate or increases to the rates, we saw in the early eighties where it was double-digit inflation for extended periods of time. No model, no matter how good your model is, can withstand that without making moves.

So there really is no choice but to make moves on both the cost side and the price side. Wages are going up on an ongoing basis. You must be increasing prices. Your cost increases are coming from both labor and materials, so whether labor-dominated or material dominated as a business costs are going up.

A 10% price increase can double your organizational profit. Now, in this case, you’re probably going to end up spending part of that increase on increased labor costs. It, you know, if you just match inflation for your employees, you’re at seven. So your labor costs are going up 7% and you’re not actually giving them any real money increase with a 7% raise. It’s the same as they used to make. Your material costs are likely to go up by similar numbers, seven, eight, maybe more. There’s some, there’s sort of two effects going there. There’s the underlying cost structure and then there’s the scarcity problem that’s occurring. You’re going to see price increases probably between labor and materials of 7-8% because their labor’s going up 7%.

And it’s a chain. So, if you’re not thinking about seven, eight, or 10% price increases you’re going to go backward. In other words, your costs are going to go up by more than your prices are going up and you’re going to squeeze your margins. In an inflationary environment where everything’s going up, a price increase doesn’t change your position on the supply-demand curve, it’s the same. The whole market shifted 7%, you moved up 7%, and there’s no conversation about losing customers.

Listen to the podcast for more on running your business in an inflationary market.

Resources mentioned in this episode:

Jim Schleckser

Jim Schleckser is the Chief Executive Officer of The CEO Project, a business advisory group for accomplished CEOs to help them solve their most challenging issues, resolve constraints, drive growth, and improve outcomes. With 30 years of leadership experience in business strategy, organizational development, sales, marketing, and more, Jim leads global organizations across many functional areas in both public and private environments. He specializes in solving issues that fast-growing firms experience in their business models and processes as they reach high-performance levels. Jim has appeared in The New York Times, The Huffington Post, and National Public Radio. 

Sponsor for this episode…

This episode is brought to you by The CEO Project. The CEO Project is a business advisory group that brings high-caliber, accomplished CEOs together. Our team of skilled advisors is comprised of current and former CEOs who have run both public and private sector companies across multiple industries. With our experience and expertise, we guide hundreds of high-performing CEOs through a disciplined approach that resolves constraints and improves critical decisions. The CEO Project has helped high-performing, large enterprise CEOs with annual revenues ranging from $20M to over $2 billion to drive growth and achieve optimal outcomes. If you are an experienced CEO looking to grow your company, visit