Business risks to consider when considering operating globally

When considering expanding operations to other countries, one of the risks that we need to consider is Inflation. Inflation is the increase in the prices of goods and services over time. It's an economics term that means the customers need to pay more for their goods and services. Inflation reduces the purchasing power of each unit of currency.

Effects of inflation and how to fight inflation

Firstly, businesses should ensure they are regularly increasing their prices to offset the effects of inflation. I know many business owners who don’t undertake this critical activity, either because they forget or because they are worried about an imagined backlash from customers. In doing so they cost themselves tens of thousands or even hundreds of thousands of dollars in revenue over a few years. In contrast, those who implement regular, fair price increases, communicated clearly in advance of their effective date, will maintain their profitability without deterioration in customer relationships.

Secondly, business owners should make a point of offering their staff a salary increase roughly commensurate with inflation each year. In real terms this gesture costs your business nothing; in fact, if you don’t give them a salary increase you are effectively allowing inflation to take money out of their pocket, which over time may erode your employees’ job satisfaction. In contrast, research indicates that offering a small increase – even just to keep up with inflation – will generally have a positive effect on your relationship with your staff. Many economists cite this as another key benefit of controlled inflation.

How to best avoid business risk to ensure success 

The Bloomberg Risk Indicators Matrix suggested that Saudi Arabia, Ireland, Israel, Ecuador and Switzerland has the lowest inflation forecast below 0.5%. When considering expanding our operations to overseas countries, we should consider to start with these counties. We need to pay attention to Venezuela which has an inflation forecast rate of 1500%, Egypt 28.8%, Argentina 25.3%. When considering expanding operations to other countries, we should limit us from these countries to minimize our risks.