The cost of living crisis is a hot topic and probably a phrase you have heard non-stop for the past month. The truth is the UK is in a state of economic downturn and recently declared a recession. So, what does this mean for a business and how can you navigate your way through it?
This crisis is, of course, squeezing the consumer’s wallets, leaving them with less expendable income which of course leaves them with less money at the end of the month. On top of this, we also have rising energy prices and the highest inflation since the early 90s. It’s safe to say that times are challenging.
Financial pressure on the consumer leads to less spending, which leads to businesses struggling or failing, thankfully though, there are ways to navigate through these stormy seas and hopefully, this article can help you do so.
Assess your existing costs, you can identify areas in which you can make cuts or replace materials with ones that are cheaper. A business should also be analyzing the running costs, do you need 12 members of staff on a Sunday? Or is it necessary to heat a whole meeting room for a two-person meeting that could be done over zoom? These are all things to think about moving forward.
Depending on your business you may have to source materials, some of which could be very expensive. To save on shipping costs and import costs you could consider sourcing materials domestically. Local suppliers can often mean lower transportation costs and as an added bonus better for the environment. It’s also worth noting that local supply chains are more resilient and reliable against geopolitical events.
Assess Energy Costs
This is a particularly important one! A lot of businesses have huge energy costs, even smaller ones, so it is important to monitor and assess how much heating, water, etc you are using on a day-to-day basis. Consider to yourself, does an empty room need a radiator on? are staff turning taps off? turning lights off as they leave rooms? These little things can lead to large costs for a business and not only are they avoidable, but they’re also unnecessary. Consider starting a company/business-wide initiative to inform staff to follow some new energy guidelines.
As costs increase the money an employee makes is spread thinner and it’s unlikely as a business you will be able to give them a pay increase. If this is the case, there are plenty of ways for you to work with your employees to help them and yourselves through this. Consider offering (if applicable) more work-from-home days, this eases the pressure on your energy bills, as no building in use, no energy costs, and the employee doesn’t need to spend on transportation costs. You could also sign up for a corporate staff discount scheme, which often gives staff discounts on shopping.
As mentioned consumers will have less expendable income and as such will likely be more frugal with their money. However, there are plenty of ways you can keep their custom. Perhaps you could offer a loyalty scheme, such as the ones many coffee shops have, buy 6 cups get the 7th free style deal. You could also introduce payment schemes that help people spread the costs on a month-by-month basis.