by Admin

The impact of inflation and how to protect your business

Nov 22, 2021
By Sabrina Deep

If you have enjoyed a massive rise in sales in the last 18 months like many others, you might think that the future looks even brighter, but this might not be the case. E-commerce grew fast before COVID-19 hit, and the pandemic pushed even more consumers online, accelerating it by two years. Online sales went up 32% in the US, the highest annual online sales growth of any year for which data is available. E-commerce thrived in 2020 because of store closures and shoppers' fear of contracting COVID-19 in public. Figures from Q1 2021 show that the coronavirus was still impacting online spending, with sales increasing 39% year over year in that quarter. The statistics from Q2 2021, though, are a different story and see e-commerce growth in Q2 slowing significantly in the first full quarter compared to a whole pandemic period. Q3 figures are not out yet when writing this article, but different authoritative sources forecast even slower growth when not a negative one.

Things might even get worse, considering the fact that the most significant rise of inflation since 2008 has now infiltrated online shopping. Increased prices, both offline and online, push consumers to change their buying priorities. A survey conducted on Sept. 9, 2021 by consumer research platform Suzy Inc finds that 45% of consumers are changing their buying habits due to inflation and think inflation will impact their online spending. One sure thing is that inflation will significantly and negatively affect everybody's net earnings, including creators and performers. The cost of living will be generally higher in the following months. This will not affect only our expenses, but most likely also our earnings, given that there will be less money in the pockets of our fans who will have to prioritize their spendings.

If business planning has always been the key to success, it might become the key to survival in the following months. With consumers changing their buying habits, it is imperative that we change our business ones and that we protect our job from the above pessimistic forecasts starting immediately. The good thing is that there is nothing to lose but everything to gain, should the future reality be brighter than expected. There is no perfect recipe for facing and surviving inflation and a possible recession as a performer and creator; it's clear, though, that limiting our spending, saving, and doubling our effort to expand our clients' portfolio are essential elements for the success of the operation. 

Know your clients and value for money

Your wealthiest fans will probably not be affected by the point at issue, but it is still crucial that you keep them faithful to you. Being too greedy might break this relationship and make you lose a vital financial asset in the medium and long term. For all the others, it's time to offer more value for their money. Bundle up content with other content or with other services you offer, such as Snapchat or ratings. Add a 30 seconds personalized thank you message to your custom videos, or add one or two complimentary minutes to their length and let your fan feeling special about it. Fans who buy a service or a locked post from you are more likely to do so again than those who never do. Offering them a substantially discounted one-year subscription may end up being the best of investments. You get covered for the time ahead, and you have the meaning of offering them services and locked content for the whole period, with a final balance clearly in your favor.

Diversify and recycle

It has been said repeatedly, but now it's time to take this suggestion seriously: expand your presence and spread your content throughout many different platforms. Yes, it is extra work. No, it doesn't require an awful lot of time. And yes, it will increase your brand awareness and income significantly. You don't need to curate your presence on every platform equally, but it is vital that while you focus on your favorite ones, you still have a mark in as many others as possible. It generates passive income, which in the worst-case scenario will cover part of your business expenses. It also generates more business prospects, and if one platform closes or it doesn't work for you anymore, you have a ready alternative. It takes one or two hours to create a profile on a new platform, set it up, and upload 4-6 pieces of content. You can easily be in every relevant platform out there within two weeks. After this initial time investment, you just need to add a weekly post on each of those secondary platforms to remain active and decently relevant. You can even use the same content for all those platforms. Suppose you are willing to focus on long-term revenue rather than a short one. In that case, you may consider setting your profile as free, there where it is allowed, and posting your social networks' free material: you will build up followers who will engross your clients' portfolio at the right time. If you need extra cash now, recycle some old content in smaller pieces and add it to new platforms at low prices (either subscriptions or locked or both). 

Keep an eye on your expenses.

When the future ahead looks uncertain, it's time to keep an eye on expenses. Limit your spending on unnecessary personal items and save money compatibly with a reasonable quality of life. In other words, find the right balance between reducing expenditures and keeping yourself reasonably happy and mentally healthy. Business-wise, think ahead: demand-pull inflation is the upward pressure on prices that follows a shortage in supply where too much money is chasing too few goods. If you reckon that you need business gear now or very soon and you see a reasonable offer, grab it immediately. It is especially true for pc components and electronics. I planned to upgrade my personal editing computer in the summer, back in January, and I ended up spending a whole lot more than if I did earlier in the year when prices seemed too high, except that they went even higher. 

To conclude, save on energy bills! A bit of attention, and you can save hundreds of dollars in a year. A shutdown computer consumes five times less than one which has been put asleep. Sleep mode makes sense if you are constantly on and off your desk, but if you don't plan to sit before it for hours, shutting your pc down will help you save on inflationary energy bills. The same applies to your studio lightings:
  • Use only low-energy ones, and make sure you switch them off whenever you don't need them.
  • Don't leave your phone attached to your charger longer than it's needed.
  • Turn your thermostat back seven to 10 degrees for eight hours a day from its typical setting.
Those eight hours could be while you are away at work or school, when sunlight is warming your house, or when you're asleep under a pile of cozy blankets. For every two degrees, you can save an average of three percent on your energy bill.

Chargebacks

Our industry has always been particularly subjected to them. With inflation on the rise and a possible recession on the horizon, it's just good homework to expect a surge of people who pay to access your content and then ask for their money back. This scenario is not just bad for your pockets on those platforms which don't cover for chargebacks requested by your fans, but also for your very existence on those which do, as a percent of chargebacks vs. sales higher than one might see you banned from the platform. Know your clients! A few content creation hubs out there offer anonymous fans rating systems which can help you understand if a potential new client is worth doing business with, but most don't. In any case, always provide relevant product and service descriptions, be clear on shipping details (for example, on custom videos), and always keep a line of communication with your clients and make sure that you promptly address any potential issue.

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This article originally appeared on the November 2021 Issue of the XBIZ World Magazine
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