As inflation rises due to the current cost of living crises, many new and small businesses are feeling the pinch. Depending on your industry, rising inflation could be affecting you in any number of ways, meaning you may need to cut back on non-essential expenditure, whether that is overheads or supplies.

In this post, we will be exploring some things small businesses can do to protect themselves and continue to thrive in these challenging times.

The Impact of Inflation

The effect of the cost-of-living crisis on consumers and the global economy is having a knock-on effect for UK businesses in a variety of ways. Some of the biggest ways businesses are being affected by this include:

Reduced consumer spending

As the general public is pushed by rising energy and food prices, they are less able to afford additional things, therefore reducing purchasing power. If you have employees, you may need to increase their wages to accommodate these additional costs.

Rising raw material prices

With rising prices, supply chains are experiencing shortages in important commodities, such as timber, crops and metals. If your businesses relies on these raw materials, this may be causing delays in you receiving the resources you need.

Higher import and export prices

With the global economy affected, higher import prices and transport delays affect businesses by pushing up their prices and increasing wait times for customers and other stakeholders.

Ways to Stay Afloat

During financial and economic challenges, there are measures your business can take to be a step ahead and avoid problems further down the line. Here are a few things you can do today to manage the increased pressure more effectively:

Financial Forecasting

This is an option you can take action on yourself, or with the help of an accountant or other financial professional. It’s a way to keep track of all your incomings and outgoings in your business. This can help you to predict what you will need to spend over a specific period. This can be as long term or as short term as you wish. We recommend a long-term financial forecast, as preparing in advance can prevent cash flow problems in the future.

Reduce Expenses

Take an objective look at your company’s spending. Some ways you could cut back on expenses can include:

• Switching to UK based supply chains where possible, to minimise import and export expenses.
• Get better deals with a new energy, water or gas supplier.
• Get to know what your customers need in these challenging times and adapt your product or service to meet these needs. This can boost customer loyalty.
• Update and increase your security measures, to prevent data breaches, fraud, and cyber crime

Diversify your Revenue Streams

Getting creative with how you present your brand or product to your customers can go a long way. Relying on a single or small number of cash streams can be risky, as you have fewer options to fall back on if problems arise.

Are there any ways you can innovate? If you have a team of experts in a particular field, you could create online resources that customers can subscribe to. This is a low-cost option that uses resources such as knowledge that you already have.

Perhaps you can modify an existing service, or add a new one at a low expense, so that you have another way your customers can benefit from what you offer.

With inflation and financial challenges hitting businesses, consumers, suppliers and world economies, now is the time to focus on the possibilities, and maximising our resources.