I recently wrote an article on the breakeven cost creep that we are experiencing as a business and how it forces us to put our prices up, with initially disastrous consequences.
Things have leveled out a bit now, and due to a lucky spike in demand and long stay bookings we’ve managed to fill up our motel once again. But we’re still adjusting to the new price structure, and forecasting the next few months is going to be tricky.
The interesting thing for me is that we are not the only people going through it. I’ve recently been discussing the matter with another small business and I’ve realised that they are going through the exact same thing.
The business I spoke to actually operates in an even more competitive market than we do. For them, though, the feeling is that there is another, bigger issue on the horizon: namely, that they will struggle to hold on to their tried and true staff.
Ever since the Labour led Government came to power, people have had their expectations progressively raised. Unions have been on the front foot with pay negotiations, and the Government has responded by largely acquiescing to their demands. For staff who aren’t part of a heavily unionised sector, who perhaps work for a small business, there is a feeling of deep envy every time a new successful pay negotiation takes place.
It’s not that people are necessarily any worse off than 18 months ago. It’s a feeling that people are worse off relative to someone else.
And of course, spikes in petrol prices and bill prices have only put this situation on the boiler.
I think that this is beginning to have a spillover effect to people’s decisions regarding their own careers. In some cases it is leading people to lose morale in their own occupation and even consider resigning.
Not only do I run a business but I also work full time. I’m very conscious that on both fronts we’re coming up to Christmas and a lot is on the line.
It’s anyone’s guess as to where this will lead us. It’s very hard to divine the macro from the micro.
But it seems to me that as people resign from jobs and start job hopping to other careers, we’ll see a drop in consumer spending. A lot of people who leave one business to go to another end up going from the frying pan into the fire. The trick during inflationary environments is to learn to stay in the frying pan as long as possible.
We’ll also see a lot more business instability, particularly over Christmas, with businesses struggling to meet the influx of orders likely to suffer severe capacity problems.
The worst affected regions will be the cities, the regions to a lesser extent. Which makes me glad to be based out in Otaki.
As people struggle to deal with an unfair world and the bad decisions that sometimes result from it, we’ll see a risky casualisation of the labour force over Christmas, with pronounced difficulty for people and businesses to meet their long term obligations and to maintain client relationships.
