Inflation has been described as paying £15 for the £10 haircut you used to get for £5.
At the moment inflation is soaring, leaving business owners facing real problems. If they increase their prices, they risk losing customers, but if they freeze prices, they put their profits and potentially their business at risk.
Inflation hits just about everything, from raw materials, fuel and energy costs to customer confidence.
The hope is that it will be short-term, but with borrowing costs spiralling as interest rates rise, businesses should look at practical savings and decide:
- Are you paying for services you no longer use regularly?
- What measures can you adopt to cut energy bills?
- Can you achieve discounts with bulk ordering or cut costs by reducing excessive orders?
- Are you making efficient use of your staff?
Maximise technology use
Accounting and financial technology can give you instant information on sales, costs and products. Cloud-based apps also reduce the time needed for vital but time-consuming tasks.
This can include invoicing systems that tell you what’s been paid and apps that help you keep track of your cashflow.
Examine your products and workforce
- Can you abandon or suspend certain products which deliver weak margins? At the same time, can a best seller withstand a price increase and boost profitability?
- Are you overstaffing shifts?
- Do you have lengthy processes with unnecessary steps?
- Do you really need those temporary workers?
Stay competitive and prioritise customers
Check out the competition, both locally and nationally, to see what they are charging for similar products and services.
This can often depend on different areas of the country and levels of relative prosperity. Can less well-off consumers withstand price increases?
Make maximum use of your accountant
Accountants offer a wide range of services, including advice, money-saving tips and revenue-boosting ideas, such as:
- Advising on business strategy
- Addressing your cashflow
- Debt management and credit control.