Assume you run a small service business. The business is incorporated. In a typical year, the business looks like this:

Revenue $450,000

Salary (to you) 100,000

Salary (employees) 250,000 Rent 53,000

Supplies 20,000

Taxes 25,000

Total Expenses 448,000

After-Tax Profit $ 2,000

Each year a small amount of profit is left in the business to serve as working capital. You currently bill at $50 per hour. Assume you cannot find more hours to bill. Inflation has caused rent and supplies to increase by $10,000. What do you do? What if the increase was in taxes instead of rent and supplies? Would your answer be different?