Businesses may be facing an uncertain future as a result of the UK's economic challenges. The British Business Bank has this advice and Business Doncaster can also provide support in many areas.
Source: British Business Bank
From the rising cost of living putting the squeeze on consumer spending to higher inflation and energy prices pressuring business costs, many smaller businesses could benefit from taking action to reduce costs and operate more effectively.
A challenging economy may place critical pressure on the UK's 5.5 million small and medium-sized businesses.
With smaller businesses accounting for around two-thirds of employment across the UK, the knock-on effects can impact employees and place businesses at risk of failure.
Tellingly, the number of registered insolvencies in June 2022 was 40% higher than the same period in 2021 and 15% higher than pre-pandemic levels in June 2019.
The good news is that there are plenty of actions smaller businesses can take to reduce the risks posed by the rising cost of living.
Carefully managing costs, ensuring liquidity for future outgoings, and being agile in finding and maintaining customers can help put your business on a firmer footing.
While the term 'cost of living' implies a consumer challenge, increased prices can impact smaller businesses more as they lack the benefit of consumer protection schemes such as the energy price cap.
The increase in the cost of living for smaller businesses is being driven by several factors, including:
Faced with a turbulent economy, many smaller businesses could benefit from reining in costs and building financial resilience.
When assessing how the cost of living crisis impacts your business, it may be worth considering a few of the following tactics:
By assessing existing costs, you could identify those that can be cut, or cheaper alternatives sourced.
This ranges from materials used in manufacturing to inventory for retail stores. Look at operational costs, too.
Expenses can accumulate over time, such as paying for infrequently used services, legacy platform costs, and expensive client meetings.
Consider ways to minimise them.
Try to avoid expensive shipping and import costs by sourcing materials, supplies, ingredients, and goods domestically.
Local suppliers can mean lower transportation costs and reduce the volume of Greenhouse Gases (GHGs) released through burning fossil fuels.
Domestic supply chains may be more resilient and reliable against geopolitical events.
It could also be worth examining where and how your business uses energy.
Evaluate energy suppliers and consider renegotiating supply contracts or switching to renewable tariffs.
You could also encourage employees to cut energy costs by turning off equipment when not in use, installing energy-efficient lighting, and adding smart meters to monitor consumption.
Explore our directory of carbon footprint and sustainability calculators.
Your staff are likely feeling the impact of the rising cost of living.
If the cost of increased wages is too much for your organisation to accommodate, consider other ways your business can reduce the burden on staff.
You could think about introducing more work-from-home days to help staff cut fuel bills or sign up for a corporate staff discount scheme, which can save employees money off supermarket shopping and meals out.
With the cost of living seeing consumers cut back on spending, it’s a good idea to think about ways you can help customers while ensuring they maintain their business with you.
Ideas include introducing loyalty discount schemes, offering cashback rewards, and introducing payment instalments to help spread the cost of buying.
It can be worth exploring if your business can hold or even lower prices – price-sensitive shoppers might be looking for a bargain when finances are tight.
Our specialist team have a range of support available to businesses.
Check out some of the support available by clicking the links below:
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