The United Kingdom has been facing significant inflation since the year began. Even now, prices continue to rise, with energy and fuel becoming 42% more expensive in July. Overall, the cost of living has been climbing, but it is projected that prices will rise even further later in the year.
These rising costs significantly impact small businesses. Since they rely on a smaller customer base, these businesses cannot make decisions that could compromise the demand for their products and services. If you’re wondering how your small business can combat inflation, here are some things you can do.
Cut costs before raising your prices
When you have a smaller customer base, it’s reasonable to resist raising your prices. However, one of the most significant difficulties for small businesses is that rising costs take a toll on their margins. Since suppliers will also be raising their costs, the profit gained from raising your prices will be diminished. This is why it’s crucial to evaluate and cut expenses where possible.
You can start by negotiating with suppliers or switching to other suppliers with similar prices and good quality. You can also try downsizing your office if you can, or checking if your company is paying for costs you do not benefit from. Even if you eventually have to raise prices, do so incrementally. As much as possible, do so in areas that will impact your customers the least.
Streamline business processes
Streamlining your business processes can help you cut costs by heightening the productivity and efficiency of your business. Since you have a smaller number of employees, automating tasks can allow you to focus on other responsibilities at work. This is why investing in project management software and customer relationship management (CRM) tools is a good idea. They can automate workflow, task assignments, communications, and data collection and analysis.
You can also streamline payment processing. The best payment processing solutions for small businesses are safer for both your business and your customers to use. They also encourage greater profit by accepting a multitude of payment options like online, mobile, or card payments. By doing so, these tools can help your business effectively maximise your customers’ payment options.
If you’re promoting your business on social media, it would be good to stay on top of messages and posts with social media management tools. These tools can take a lot off you and your staff’s plate, and can even provide data that can help you make better business decisions.
Prioritise retention
With rising costs, employees might be under more significant strain at work. As a result, they may also be on the lookout for better job opportunities. This may mean increased employee turnover for your business in the long run.
With increased employee turnover, your business may experience greater difficulty and higher costs in filling those vacant positions since you will have to spend resources on temporary workers, job postings, recruitment fees, and screening processes. You might also suffer from losing productivity and profitability.
One of the best ways to increase employee retention is by offering career development opportunities. As this isn’t always possible for small businesses, you can also reduce staff turnover by hiring the right people, recognising their efforts, prioritising a healthy work-life balance, and giving regular performance reviews. These methods ensure that your staff works in a healthy and less stressful environment.
Small businesses are essential to communities and are critical to creating jobs. Although small businesses may be significantly impacted by inflation, these steps can help protect your company as it faces rising costs.
