How can SMEs handle the cost of living crisis?
The current cost of living crisis in the UK has already seen the economy decline, with customers saving money and consuming less.
As a result, the growth of SMEs has halted, with post-pandemic recovery decelerating.
With continued uncertainty and the possibility of long-term effects, many businesses will be harbouring concerns.
So, how can you alleviate the dangers of the cost of living crisis on your business?
Consider raising prices
This may not be something you want to do, especially with people already facing a variety of price hikes.
However, if your business is suffering from large costs, it may be something that becomes unavoidable.
If you must increase your costs, aim to make as little change as possible, whilst still working profitably. It’s important to stay competitive in the market, as price hikes can drive customers away.
Hold financial audits
Understanding your expenses and how they change is vital.
Conducting regular financial audits will help you see the impact on your business and give you time to take proper action.
Your audit may include methods to reduce costs, such as removing or reducing unnecessary spending.
Reduce energy use
Currently, one of the main culprits behind increasing costs is energy prices.
You should carefully think of ways to reduce your energy usage to lessen these costs, such as:
- Switching off equipment when not in use
- Using equipment with lower energy consumption
- Leaving equipment running for shorter periods
- Urging your workforce to do their part, such as turning lights off at the end of the day.
Search for alternatives
If you do not want to raise your prices, or the above tips aren’t working for you, the best direction is to seek alternative solutions.
This may include offering your products at a lower cost by exploring cheaper materials.
However, it’s important for quality of work to always remain at its highest standard, so that your clients remain happy, but overall expenses are lowered.
Need help navigating your business through the cost of living crisis? Contact us.