After the impact of COVID-19, small businesses across the UK are now having to deal with rising costs. Here are a few suggestions on where to consider some changes.
Record high inflation, skyrocketing energy bills, increasing fuel prices, and reduced consumer spending are among the many challenges business owners are facing as the UK experiences a cost of living crisis.
So how are you dealing with the crisis? Here are some suggestions to consider:
- Passing on some of the costs to the customer. None of us want to put prices up however ensuring your profit margin is maintained is vital – making sales at a loss is not a business that will be here in 12 months time unless you have a large balance to float off.
- Add a range of products at a lower price point. This allows you to retain customers who are under financial pressure. As a small business, it’s essential to adapt and pivot as the market changes.
- Pre-buy stock. This means you have time to adapt to any rising costs or other external factors and come up with a plan to negate the effects of these cost increases.
- Having a financial buffer to deal with problems is one thing I highly recommend to other businesses. The safety net that a little bit of time to deal with an issue can afford you is invaluable. It may not help you now with the issues but moving forward it’s something to aim for.
- Keep in contact with suppliers. Ask them about rising costs so that you can factor these in ahead of time.
- Talk to your customers. Is there a cost cutting option which your customers would prefer such as recycled packaging. This reduces cost in a place that doesn’t affect the customer.
- Change suppliers. It is worth doing some research to check you are not overpaying. That being said, some relationships are worth paying that bit more.
- Having fewer meetings and / or meeting more than one person on the same day to reduce fuel costs.
- Using less paper in the office.
- Use online calls for meetings rather than phone calls.
- Ensure that you are not paying for subscriptions or services that you no longer need. Check those bank statements for recurring charges.
- Importing has become incredibly expensive so look for more locally based production and source material.
- Expanding into new markets in order to find new customers.
- Consider a shared office space or working remotely. With rents on the rise and an acceptance of home working, it is something to consider.
- Look at what you can do to support staff retention. Recruitment is time consuming and expensive. Keeping the team you have will save you money.
- Streamline your internal processes. This will reduce the need for taking on additional staff.
- Buy second-hand. Not always an option but something to think twice about when making those office or business purchases.
- Operate with a healthy profit margin, then rising costs won’t be a significant worry. I recommend keeping a monthly profit and loss sheet so you have a full picture of your finances.
- Focusing on selling your most profitable product or service.
So that’s my list – I’m sure there are many, many more I haven’t included but as a first to-do it’s a good place to start.