The Inflation-Proof Business WordPress Membership plugin - Membership Sites

Aug 19, 2022

The Inflation-Proof Business

I'm gonna sound kinda silly, but it crept up on me.

I live in an extraordinarily remote area in Missouri (my internet is DSL If that's an indication of how remote) so we tend to be somewhat insulated from larger economies. Gas prices had gone up and I was working from home and didn't really notice. The prices at the grocery store (I believed) have remained pretty much the same. My energy bill hadn't changed much (presumably due to the fact that it's a local cooperative that uses a lot of hydro-electric energy) And I didn't "feel" this inflation everyone was talking about.

It was the New York Strips who wooed me.

Since I can remember I can remember they were $9.99/pound. After a while the price was $10.99. The next week, they were $11.99. In the blink of an eye, they'd jumped to $17.99/pound. So, what in the world is going on? These were my go-to cut. Now I'm paying attention! Who do I get mad at?

It's a good example of how inflation is an invisible "tax" on your company and your life. An extra dollar here, another 50 cents over there, or 10 cents per gallon at the pumps... And when you realize it everything you had left over before has gone. And, even more importantly, you're not paying your bills for the month.

This chart illustrates the Consumer Price Index since 1959:

This measures the rise in prices for items of daily use over time. Notice the jump in prices right around the start of 2020. This will be covered within a second, but this puts some data to what people have been experiencing. Prices are indeed rising.

What's the solution? We can stomp our feet and complain about the state of political issues (and I think there's some legitimate points here) however, I will always try to be more confident in myself. What do I need to do personally to deal with this situation? This is what I'll cover here, but before doing that... it's helpful to be aware of what we're against.

This raises to ask...

What Is Inflation?

There's some confusion regarding the subject. Most people believe inflation refers to a general increase in the cost of items, however that's simply an result on the basis of inflation. The actual definition of inflation refers to an increased quantity of a particular currency. The majority of times central banks (like the Federal Reserve) will, by a variety of methods, introduce an increased amount of money into the economy. In the case of the "quantitative ease" that you've heard of many times over the past 10-15 years was one way the Federal Reserve in the United States has injected more cash into the U.S economy.

It sounds good, but it has its problems, namely... the issue of inflation. The supply of money rises, each dollar is worth less (because there are more readily available) as well as the price of items are rising. Thus, inflation actually reduces the purchasing power of a person. Each dollar (or another currency unit) is worth less than prior to.

It's the reason it's difficult. Now, the money that you earn through your work or business is worth a fraction of the amount it used to be. Then, you'll have to work even harder to get the same amount of money to buy things that you had before. In many cases, you're almost completely powerless to make any changes to stop it. The factors that cause inflation happen at a local level, and are governed by the policymakers and politicians that, frankly, probably don't care much about you.

Of course, it brings up another question:

Why is Inflation so High?

Most often, what people are thinking of when they inquire "why the inflation rate is so high" is "why is everything priced significantly more". Energy, fuel, food as well as other items -- they've all dramatically risen in price. Why? It goes back to the money supply. The more money in circulation (inflation), the less the value of each dollar (reduced buying power), and the more the prices increase. That's the basic equation.

This graph shows the quantity of "M2" in the years since 1959. M2 is broad measure of the supply of money, which the Federal Reserve watches closely. Here's how M2 has grown over the past decade:

Take note of the rise in M2 prices since the year 2020. There's no reason to believe, then, that we've seen a spike in prices that last few years. This is directly related to the dramatic rise in money supply (M2).

We know the reason for this spike it is because that the U.S. Government increased spending significantly to combat the coronavirus pandemic. Although many people found the assistance from the government beneficial, the type of spending also has consequences. The inflation we're seeing now is just one example.

In the end, the government has pumped a bunch of new money into the economy to try and deal with the epidemic. One result of this is the emergence of inflation. This is (one of the main reasons) why inflation (and prices) are at a record high currently.

What does inflation mean for you?

I've discussed this in a little, but inflation leads to diminished purchasing power, a rise in cost of products, diminished savings and more. Essentially, everything you buy costs more. If you are a business owner who operates online that means your expenses are likely to have increased. In addition, there are your personal costs in terms of gas, food, energy, and more. Therefore, if you operate an online-based business that is traditional (more on that in a minute) You must now work more to enjoy the life you were living prior to the time when inflation soared.

Which one of us is most affected by inflation?

Inflations hurts people who are living on fixed incomes most. People on social security, disability payments, most wage-earners, and frankly... the majority of online business owners (given the way their business is structured). These people's incomes are mostly fixed -- meaning they aren't able to increase rapidly or easily. However, everything else around them costs more. So, they have the same amount of money coming in with a higher cost to pay out as well as being less fortunate overall.

It also hurts savers. If you've spent the last 20 years saving $500,000 for retirement but that amount of money will not be able to buy as much. So, inflation has essentially "robbed" the savings.

Can Inflation Be Stopped?

This is a 2-sided question. Can the government stop printing money, and thus reduce the amount of money available? Sure, it can. That also would have certain consequences -- some positive, some bad -- and there's great debate about the appropriateness of doing it. In all honesty there's not much influence over this.

We'll avoid everything else and concentrate on the question we think will be more relevant:

What Can YOU Do About Inflation?

It's obvious that we're biased however that's not one reason we're playing the membership game. Membership is, according to us, is the inflation cure. In the simplest sense, you can simply raise the cost of membership to account for the rising cost of living. Problem solved. However, there's higher than that.

A steady, stable source of revenue that you know is on the way each month is a game-changer. For most online business owners, they're caught on a spinner. Every month, they begin back at zero and will only make what they bring in each month. This is a challenge that gets more difficult due to inflation since you must bring in more in order to make into the same amount of money (because everything costs more).

But with membership, you don't start at zero. The membership could begin at $100 or $500 or $5,000 -- whatever level you're at with your membership but it's more than nothing. And, with time, focus, and perseverance, you can grow that "floor" higher and higher until inflation doesn't even phase you.

The same way that well-known internet marketer, Frank Kern says:

"It felt like I was on this endless spinning hamster wheel. I made the decision to focus on [Kern's Inner Circle] -- monthly recurring income of $522,000 and I'm having the time in my entire life."

A person as famous and skilled as him felt the strain of constantly starting at the same level each month, and made use of the benefits of membership to alter this.

Naturally, there are those who prefer to tackle things the hard way.

However, we'll be spreading the positive word about membership since we're convinced it's a game-changer for online businesses or for anyone who wants to get off the hamster wheel. In any case, if you're in the market, our top software, Member, helps you transform your WordPress website into a full-featured website for membership so that you can make use of this strength.