Inflation and transformation: Tips for SMEs on the importance of efficiency

Article updated 8th January 2026

Inflation has a way of hiding problems. It can quietly shield inefficient businesses, mask operational flaws, cover up poor decisions, and give underperforming firms a lifeline—one they often did not know they were relying on.

However, that cushion is slowly disappearing. As inflation stabilises across many regions, cracks that once went unnoticed may now start to show.

We're entering a new era—one where operational strength, not price markups, determines success. For small and medium-sized enterprises (SMEs), this means adapting fast. At the heart of that adaptation is digital transformation.

The Argentine case study

Argentina provides a clear example of how prolonged inflation can influence business behaviour. For many years, rising prices made it easier and somewhat expected for businesses to pass on cost increases, which reduced the immediate pressure to improve productivity, systems and financial discipline.

As inflation began to slow during 2024 and 2025, this created a stronger focus on efficiency. Margins tightened, and many businesses responded by improving financial visibility, strengthening cost control and investing in better management information.

This shift has helped a growing number of Argentine SMEs build more resilient operating models. The experience shows that periods of economic adjustment can encourage practical transformation and reinforce the value of strong financial and operational fundamentals.

Exposing inefficiency

The lesson is clear: inflation can make idleness look profitable—but only temporarily. Inflated margins can paper over weak processes, but when inflation cools, the safety net vanishes, and the real state of a business is laid bare.

Today, the global business environment is shifting. While inflation remains high in many regions, it is stabilising or declining in others. This could be a turning point—and a wake-up call for SMEs that have relied on increasing prices to cover operational inefficiencies.

Businesses that will thrive are those that are run with speed, accuracy, and transparency. Those that have invested in systems that eliminate waste, improve customer experience, and enable smarter decisions.

If you are still relying on manual processes, your business is not just inefficient—it is exposed. If you haven't digitised core operations, your company is likely bleeding time and money. And if your strategy hasn't evolved since 2010, your business is competing in a world that no longer exists.

What does digital transformation really mean for SMEs?

Digital transformation is not about building a social media presence or buying the latest software. Instead, it is about fundamentally rethinking how the business is run. For SMEs, this means embracing technology not as an accessory but as the organisation's engine.

Five key shifts define fundamental transformation:

1. Automating processes

From invoicing to inventory tracking, automation saves time, reduces human errors, and lowers costs. Manual tasks drain resources, and with recent advances in AI-based technologies in particular the business case for replacing them has never been stronger.

2. Integrating operations

A fully digitalised back office connects finance, sales, procurement, and HR into a unified system. This means better coordination, real-time insights, and more agile decision-making.

3. Elevating customer experience

Customers expect seamless digital interactions. If your buying or onboarding process is slow or clunky, they will take their business elsewhere—often permanently.

4. Using data, not instinct

In today's business environment, data is essential. SMEs must know how to collect, interpret and act on information—from customer behaviour to cash flow patterns and from pricing strategies to staffing decisions.

5. Protecting digital assets

Going digital without robust cybersecurity is like buying a safe and leaving it unlocked. As digital adoption rises, so do threats. SMEs must take cyber risks seriously—from phishing attacks to data breaches.

Digital transformation is no longer optional

Digital transformation is no longer a nice-to-have—it is the minimum standard for staying competitive. What was once a differentiator has become a baseline. So the question is not whether to transform but whether you will do it in time. Now is the moment to take a clear-eyed look at where your business stands. Consider the following questions:

• Where are the inefficiencies you have been overlooking?

• What tasks are still manual that could be automated today?

• Do you have the systems in place to adapt, or are you holding on to outdated ways of working?

Inflation and transformation: What SMEs must learn to build for the future

In a stable or slowing inflation environment, businesses can no longer rely on markups to mask flaws. Efficiency is becoming a non-negotiable, and companies that fail to modernise risk building their future on fragile ground.

If your business still operates as it did a decade ago, you may already be falling behind while your competitors are rebuilding systems instead of just adjusting prices. Without inflation to give businesses breathing room, the cost of the status quo will quickly outpace the price of change.

For SMEs around the world, the window to act is open—but not indefinitely. Let HLB be your partner in building a more efficient future and guide your digital transformation.