Inflation is described as paying £15 for that £10 haircut you used to get for £5 when you had hair.
It is soaring at the moment and leaves business owners facing real problems.
If they increase their prices, they risk losing customers, but if owners peg prices, they put their profits and potentially their business at risk.
Inflation hits just about everything, from raw materials to higher 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 instant information on sales, costs and products and allows cloud-based apps to reduce the time needed for vital but time-consuming tasks.
Invoicing systems can tell you what has been paid, and other apps that help you keep track of your cash flow.
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 need those temporary workers?
Stay competitive and prioritise customers
Check out the local and national competition to see what they charge 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?
Utilise your accountant
Accountants offer a wide range of services, including strategic advice and money-saving and revenue-boosting ideas, including:
- Advising on business strategy
- Addressing your cash flow
- Debt management and credit control
If your business needs help during these difficult times, having a trusted advisor in your arsenal can guide you through the challenges. Arrange a free consultation to discuss your circumstances with us today.
