Inflation levels in Britain have reached 7% – the fastest growth in prices in nearly 40 years. Petrol prices have risen by 12.6p per litre in the space of one month (from February to March), household bills are soaring, and food costs are expected to increase by up to 15% this year. For businesses, the rate of VAT – which is the tax paid when purchasing services or goods – is going up too.
As well as heightened product and energy expenses, over one in four companies has experienced some sort of supply chain disruption in the past months. Not only that but many businesses have also witnessed higher transport costs, new custom duties, and a lot more paperwork.
So what measures can you take to tackle the existing inflation? Here, we explore some tips on how businesses can confront the rising living costs and keep operating with confidence.
Monitor and reduce costs
First things first, finding ways to minimise unnecessary expenses is a crucial step to take when it comes to dealing with pricey bills. It is also wise to ensure you have a solid reporting and financial control system in place and to outline a plan for the year ahead. What are your finances looking like? An up-to-date report with specific aims and targets will help you keep on track. In this respect, seeking advice from an audit accountant will provide you with the support and recommendations you need to avoid potential miscalculations.
There are several different choices you can make to reduce your costs. For instance, why keep the lights or heating on in unused rooms? Or why print numerous sheets of paper when you can download digital documents onto your devices instead? By addressing avoidable expenses, you can actively keep your company’s finances in check while softening the blow of rising price tags on essentials.
Renegotiate contracts with suppliers
As prices continue to go up at a speedy rate, you may want to consider negotiating both terms and contracts with your suppliers. You should not feel ashamed or embarrassed – the cost of living crisis is putting most companies to the test, and suppliers are fully aware of the situation.
In this respect, you could enquire about possible discounts. Will they offer you a more advantageous and cost-effective deal if you pre-order your products? Will buying in bulk save you money? There is no harm in asking! It is worth remembering that, given the competition they face, most providers are willing to propose more affordable options to retain existing customers.
Stock up on vital items
If you have managed to set aside some money for your business, you may want to invest it now to stock up on essential products and equipment. Inflation is likely to keep soaring over the next few months, which means that prices will not be getting any cheaper. Therefore, purchasing what you need now – before items become even more expensive – can save you important cash.
What’s more, if you are on the hunt for a new office space, keep in mind that the housing market has been affected by the current crisis too. House prices have recently reached an all-time high record, but they may soon start to shrink again to favour people with overstretched budgets.
If you currently do not have the funds to afford a new office or to pay a substantial rent, technology can provide you with a huge helping hand. The events of the past couple of years have highlighted the comfort and benefits of flexible working, and technology has played a considerable role in making these routines successful. When possible, virtual and remote working can allow employees to be productive from all corners of the country while also sparing you from pricey workplace expenses.
Innovative digital platforms may give you the opportunity to keep an eye on your business as a whole too. From enhancing productivity levels to safely storing documents in one place, technology can truly drive your business’ efficiency and limit considerable costs.
Think about your customers
Customers are at the heart of every business. Without them, companies would not be able to survive. In a period of financial crisis, being transparent with your clients will pave the way towards ensuring they are loyal to your brand. Has inflation forced you to lift the cost of your products and services? Be honest about it and inform your customers from the outset – there is a chance they will appreciate your sincerity and stick by your side.
What’s more, do not cut corners when it comes to marketing and promotion. Again, thanks to technology, the digital world will help you reduce your expenses significantly. To minimise your costs while maximising your efforts, why not identify a specific demographic? Who would your services appeal to the most? Of course, this can be a short-term solution. But, in the meantime, it can help you maintain an advertising presence and preserve your earnings.
Ultimately, the cost of living crisis will present businesses across the country with an array of financial challenges. However, from renegotiating terms with suppliers to exploiting technology, companies can tackle inflation and safeguard their hard-earned profits.