Everyone is feeling the cost of living squeeze right now and there isn’t a day when it doesn’t hit the headlines. But this isn’t just a consumer issue, high inflation and rising costs are a major concern for small businesses too.
Business owners who’ve experienced challenging times as a result of the pandemic are struggling with the impact of the soaring costs. The combination of the two is a double blow for businesses. However, it’s not all doom and gloom. There are things you can do to navigate the current financial situation and reduce the risks for your business.
Finding a way through can seem daunting but, by taking a few steps, you can help to protect your business. If you are wondering where to start, here are some tips from the Better Business at Hand team.
How is the cost of living crisis impacting small businesses?
It’s human nature to ignore things sometimes for fear of discovering how bad they really are, this certainly rings true when it comes to our finances.
Bleak as it may seem, it really pays to understand the issues you are facing. You can then find solutions and coping strategies to see you through a crisis. At Better Business at Hand we specialise in helping small business owners solve problems.
So, how is the cost of living crisis impacting small businesses?
As they recover from the pandemic, small businesses are being hit by rising costs including soaring energy and fuel bills. High inflation means that the price of everything is rising including raw materials, which increases production costs. The result is a very challenging business environment.
On the positive side, over the past couple of years business owners have developed greater resilience in dealing with the unexpected and have adapted to survive and even thrive. In the face of the cost of living crisis, the first step is to identify the biggest threats posed to your business. You can then develop strategies to see you through. That’s where we come in!
Our expert team can give you pointers and advice on how to navigate the cost of living crisis and do the right thing for your business. Meet the Better Business at Hand team. If you have a business challenge or a question that needs answering, you can book one of our team for a free 15-minute Discovery Call.
7 Tips on how to navigate the cost of living crisis
- Know your finances
As inflation hits a 40 year high, many small business owners are struggling to cope with the soaring prices of energy, products and services. The key to business survival is to know your finances.
Your accounting work should include break-even and stress (or burn) calculations, projected cashflows, profit and loss, and balance sheet calculations. Stress calculations involve quantifying risks in the context of wider scenarios including calculating the impact of risks such as the current cost of living crisis.
Many small business owners took out Bounce Back Loans and other loans during the pandemic. Repayments could be an issue for some businesses. If you are struggling, look at support options including deferred payment and interest only payments. At Better Business at Hand, we would always recommend asking for help before things spiral out of control.
Chartered Accountant and Forensic Accountant Tim Vogel can talk you through issues regarding your accounts. Book a Discovery Call with Tim.
The way you price your products and services becomes even more important during a cost of living crisis.
It’s vital that you review your pricing against the costs of producing and delivering your products and services.
If the cost of production has gone up because your suppliers have raised their prices you may need to increase your prices to protect your profits.
If you do have to put your prices up, explain why to clients and customers while also emphasising the value and quality of service you offer.
At the best of times, small business owners struggle with what to charge, especially start-ups. If you need help reviewing your pricing, book a free 15-minute Discovery Call with Business Planning expert Maria Pombo. Book a Discovery Call with Maria.
- Assessing your overheads
To navigate the cost of living crisis you might need to assess your overheads. These are the costs that are associated with running your business but might not be attributable to your products and services.
Take steps to review the true cost of your overhead expenses and look at where you could make some cuts. You could also look at negotiating contracts and asking for discounts. Don’t forget to ask your staff for their ideas on how the business can save money.
- Forward planning
Planning is always the key to business success whether you are in the start-up stage or are well established. It provides a guide for action and can help to ensure that the business has a healthy cashflow.
Business planning is even more vital during a crisis as it can help you be more in control. You need to have both quarterly and more long-term plans that you can adjust as circumstances change. Build in objectives so that you can assess whether or not your plan is working and you can then make any changes.
Flexibility is key, and with the power to change things at speed to maximise opportunities and mitigate risk, being flexible is something small businesses do well.
If you need help with business planning, you can meet Maria during a free 15-minute Discovery Call and find out how she can support your business. Book a Discovery Call with Maria.
- Keep Marketing
During a financial crisis, marketing activity is often the first thing a business stops to reduce spend. Review your marketing but don’t stop completely as your business still needs to retain and attract customers in order to keep trading and grow.
The first step is to look at your customer personas and see if their needs have changed. You can then look at how you can meet their requirements and consider adjusting your offering to reflect current needs.
Take time to hone your marketing messages. During a cost of living squeeze customers – both B2B and B2C – are looking for value for money. Emphasise the value your products or services represent and stress the benefits.
Look to other marketing channels to boost your sales. Could you do more on social media which is relatively low cost compared to other forms of marketing? Is your website performing as well as it could be to generate sales for your business?
Better Business at Hand Consultant Stirling Austin specialises in online growth and can help with your website questions and challenges. Book a Discovery Call with Stirling.
Forward planning is great but sometimes we have to deal with the here and now. When your finances hit rock bottom, turnaround services can help you restructure your finances and/or source alternative funding to relieve cash flow for your business.
Even in challenging times, poor performing businesses can recover and can convert losses into profit.
If you need help with turnaround, you can meet Turnaround Specialist Maria during a free 15-minute Discovery Call and find out how she can help. Book a Discovery Call with Maria.
- Look after your mental health
It’s always vital that we look after our mental health but even more so during the cost of living crisis which is having a negative impact on wellbeing for so many people.
With business owners suffering sleepless nights because of business worries it’s essential that they reach out for support. As well as looking after themselves, business owners should keep an eye on their team.
The charity Mind has free resources available to help improve mental wellbeing in the workplace. Visit Mind to get help.
ALWAYS ask for help if you need it. With the right support we can get through the most challenging times.
Everything might seem challenging right now but there are steps you can take to mitigate the effect the cost of living crisis has on your business.
Small business owners should focus on their finances and planning is key to business survival. Review your pricing and your overheads to see if changes need to be made. Keep on marketing to retain existing customers and attract new prospects to your business. If your finances spiral out of control seek advice.
Most of all take care of yourself and those around you. We will weather this storm together!
At Better Business at Hand we provide advice to help business owners solve problems. We’re here for the good times and the not so good times. Whenever you need support for your business our expert team are on hand to help.
What’s more you are in control of what you spend with us, an important factor in the current financial situation. You can choose from 15, 30, 45 or 60 minute appointments to suit your needs and budget. The best way to start is with a free 15-minute Discovery Call.
Meet the team and arrange a discovery call to find out how we can help.