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The Impact of Inflation on MSPs and Small Businesses

15 June, 2022

Inflation may not be a monster altogether as it is part of economic evolution. However, high inflation is detrimental to most small businesses and MSPs.

A major challenge MSPs and small businesses are facing is pricing. Since the cost of business operations is rising, it is logical that they increase prices to attain a profit. On the other hand, the increased prices automatically lower the customers’ purchasing power reducing the sales volume.

The main effects of inflation on SMBs and MSPs include;

High production and service provision costs

Inflation comes with higher wages, higher transportation costs, and a general increase in the cost of every part of production and service provision. Sometimes, there may be a shortage of supplies or even delays.

Increased prices

 The increased cost of production has triggered high prices. Businesses and MSPs have increased prices to maintain a given profit margin or they will close down. These high prices reduce the purchasing power of customers and reduce the sales volume of the sellers.

Reduced profits

Yes, the SMBs and MSPs increase their prices; but there is a limit that they cannot exceed since they fear losing their customers. This causes profits to dwindle significantly. There is a constant struggle to fix the right prices for maximum profits and retention of clients.

Increased interest rates

Loans become expensive and expanding businesses become less attractive. Businesses can no longer afford enough loans to grow themselves. Investment becomes hard to realize and businesses remain stunted

How to keep your business afloat during inflation

Hard as it may look, inflation may have positive outcomes on small businesses and MSPs if handled well. Check out the following strategies that can help small businesses and MSPs survive inflation;

Creation of a win-win pricing

Instead of just increasing the price of goods or services, an enterprise should add some value to the service or commodity. For example, An MSP knows their client's need, if they address the need and add the price, the client feels less taxed because they are gaining more.

Expenses review

Both SMBs and MSPs should look into their most costly items, like rents and mortgages among others, and find an alternative. For example, they may choose to go virtual or hybrid to save on housing costs.


MSPs may choose to leverage automation. This will save time, and improve efficiency so that they remain relevant to their clients. Correctly implemented and supported technology is invaluable. yet, it costs less than the use of manual labor and is the way to go in a bid to beat inflation.

Focus on growth

It may seem like a bad time to think of expanding a business but it offers the necessary pressure needed to grow ahead of inflation challenges and competitors. By increasing marketing, pricing creatively, and investing in valuable technology a business can get a breakthrough and grow above the small-scale business challenges.

In conclusion

Inflation is a monster to small businesses and MSPs. It strains profits, threatening the businesses’ survival.

Creative strategies, however, need to be employed to maintain the businesses. The strategies above when properly implemented, tables turn, as they provide an opportunity for the business to grow.