Today we want to share some important tips on how your small business can survive the cost of living crisis. You don’t have to look too far to notice the massive impact of the rising cost of living. Research into human resilience highlights how times have become volatile, complex, and uncertain, with many aspects of daily life and work testing businesses and humanity in general. While individuals are feeling the heat, the current cost of living also negatively affects businesses. Gas prices are shooting up, energy costs are soaring, and prices of products have also gone up. All these are enough to cause the average business owner some concern. While large corporations may have the resources to muddle through, small businesses usually lack the financial safety nets needed. And to stay afloat, small business owners must find ways to navigate the current challenges. Here are some simple ways a small business can survive the current cost of living crisis.
- Keep track of your expenses
One of the first things you want to do is keep an eye on your expenses and start looking for ways to cut back on the unnecessary or avoidable ones. Your business will struggle if you allow spending to go beyond your means. For now, it may be wise to reconsider business projects that do not bring in direct revenue. And if possible, you might want to start looking into the possibility of renegotiating with your suppliers. This way, you can see if there are opportunities to cut supply costs.
- Consider increasing your prices
Increasing the prices of your goods or services makes sense if your production expenses are going up. Otherwise, your business will run at a loss, and you may go down and under. You may think increasing your prices may cause you to lose your customers, but other businesses are already doing that. The stats show that at least 80% of small businesses have already increased the prices of their goods and services to counter the negative impact of inflation. Plus, if the quality of your products is high and you have a great relationship with your customers, price increases shouldn’t adversely affect your business. The most important thing is to first communicate and explain your increases to your customers.
- Stay connected with your customers
Consumer confidence is already dwindling, and you don’t want your customers to lose confidence in your business now. This is why it is important to remain connected with them as much as possible. Adopting tech solutions can help you drive growth, but technology can also help you connect with your customers. For example, you can take advantage of social media platforms and apps and use automated email marketing to keep in touch with your existing customers. You can update them about attractive deals, special offers, and other perks that keep them interested in your products and services.
Beyond bolstering customer confidence, staying connected with your clients can also help encourage loyalty and ensure that your cherished consumers do not elope to join your competitors. And speaking of customer loyalty, the next point is equally important.
- Focus on your core customer base revenue
Customer loyalty is everything when uncertain times hit. At least your loyal customers will ensure that you keep your base revenue flowing, which is why you need to focus on them the most. Plus, you have invested years of resources into building your loyal customer base; the last thing you want is to lose them. Your loyal customer base represents the success of your business, and with consumption levels dropping in general, protecting this loyal customer base can ensure business survival. When focusing on your loyal customers, ensure that your high-quality product offering and service quality to them does not fall.
- Cash flow forecast
After tracking your expenses and juxtaposing them with your revenue, you can perform a cash flow forecast. In most cases, business owners rely on weekly cash flow forecasts, but that may not be enough in this case. It is advisable to plan much further ahead, as that allows you to identify any issues with your cash flow before they become problematic.
At the moment, several reports across the business community indicate that cash flow is slowing. Finding effective ways to manage your money has become even more paramount, and getting your cash flow management wrong can be very costly. But with proper cash flow forecasting, you can differentiate between the two valuable financial metrics – profits and cash flow. You can track any expected cash movement in the future, know your company’s future cash position or profits, and run your business while waiting for the expected profits to become real.
- Adopt tech solutions that drive growth
Modern technology not only makes work easier, but it also offers numerous cost-cutting benefits for small businesses. Most of these tech solutions, from accounting platforms and HR management programs to payment solutions, are budget-friendly. Plus, you can scale them as your business grows. Adopting the right tech solutions allows you to cut back on the manual labor you need to complete many administrative duties. If hiring workers has become too expensive for your small business, you can use tech tools to fill some of your administrative gaps.
If things are getting too overwhelming for you and your business, consider working with a financial advisor to help stem the tide. A financial advisor has the experience and expertise to help you assess the viability of your business and develop an effective model or business strategies that will keep your establishment afloat. Financial experts can review your company’s internal and external expenses, revenue, and current debt to provide a roadmap on how best your business can survive the high cost of living. In a time when resilience and survival appear to be the main focus of most businesses, financial experts can offer the helping hand most small businesses may need.
The current global cost of living crisis can cause you to be worried as a business owner. However, with these simple tips above, you increase your business’s chances of surviving the current situation.