The cost of living crisis is having a real impact on business. Consumers are now left with less after their living expenses have increased while wages remain stagnant. Rick Smith of business consultants and insolvency experts, Forbes Burton, explains how businesses can avoid this without taking too much of a bite out of their business.
There’s a significant sense of trepidation in the air at the moment. With energy, food and prices in general rising with no signs of abatement, there’s a real pressure on consumers to spend less and save more. The cost of living crisis has been exacerbated by myriad factors, but real world events such as the conflict in Ukraine and the fallout that has on the global supply chain means wallets are more squeezed than in recent memory. Those with the misfortune to live through the last recession will have feelings of deja vu, while those who have not experienced this before will no doubt be slack-jawed at the almost vertical rises in costs.
But what about business?
As much as individuals are suffering, this will no doubt have impacts on business. As people tighten their belts and ultimately want to spend less as their wages are reserved for the spiralling costs of rent, food, energy and other necessities, businesses are left on the back foot at times. Rather than simply burying heads in the sand however, this is actually a great time to rethink, regroup and think about the future sensibly.
What can businesses do?
It’s simple really, plan ahead. Look at the following elements of your business:
Review your business plan: When was the last time you truly looked at your business plan? A year ago, two years ago? What has changed since then? How can you act on the changes that have been put your way? Seek out new, more realistic goals given the circumstances and even if things are going well now, look at what could be coming your way in the future. Could there be an unseen ramping up of costs for other elements of your industry that will impact you? Are the implications here simply going to be delayed?
Set out a clear marketing strategy: There’s never a better time to go to market than in a crisis or at pinch points in global financial periods of stress. Stopping marketing is what a lot of companies in distress set out to do once trouble heads their way. However, if you stop speaking to your audience, they will presume that you have simply shut up shop. Do some research, where are your customers spending most of their time? What are they searching for? Concentrate on those elements now and commit to a ‘mop up’ campaign to cover other channels to ensure you don’t miss anomalies along the way. Remember, to stop is to block your customers from ever finding you and established ones from coming back.
Look again at cash flow: Take a look at your projections for cash flow. If trouble does head your way, how long can you last on the cash reserves you have? Is it really time for that large purchase or would it be better to be able to pay your staff’s wages for another six months? Do you have enough liquidity or is there a gap in your finances that cannot be plugged? Use your cash wisely, try to consolidate debt to make headway on having a reserve if things get truly bad.
Look after your own: Staff retention is possibly more important now than ever. Making yourself an attractive employer at the moment would be key to keeping staff, attracting more dynamic individuals and keeping afloat. The costs associated with the hiring of new staff or replacing them pales in comparison to simply retaining them. Also reach out to your staff, are you confident they are making it through without too much trouble? Be helpful and offer help if they are struggling.