The cost of living crisis has hit the UK hard. As inflation has risen, many small business owners are starting to worry about the future of their business. But if you want your business to survive, it is important to not bury your head in the sand. Instead it is time to start planning ahead, so that your business can continue to thrive.
Here are five tips to help your business survive the cost of living crisis.
1. Tips To Help Your Business Survive The Cost Of Living Crisis: Create A Cash Flow Forecast
Creating a monthly cash flow forecast is a great way to ensure your business doesn’t struggle financially over the coming months. You can do this using an Excel spreadsheet; all you need to do is input all outgoing and incoming costs. Include set expenses, including monthly bills and stock, and then add incoming costs at the end of the month. Make sure to include tax and VAT as well.
This will make it easier for you to predict earnings over the coming months, and it will also allow you to analyse where costs can be reduced. For instance, you may realise that you need to save more for VAT, or you might decide to switch to a cheaper stock supplier to save money.
2. Consider Switching Energy Suppliers
Energy is a big expense right now, but you might be able to save money by switching to a different energy supplier. Sure, the savings may not be massive – but over time, they will add up! There are also some suppliers who are offering discounts to commercial customers, which is very helpful right now.
3. Reduce Expenses
If your outgoing costs are too expensive, it may be time to reduce costs. This may involve changing how your business is run; for instance, you may need to move to a smaller building so that you can save money on rent. This may feel like a step back, but it is important to be flexible so that your business can survive. Obviously decisions like this are difficult, so assess your situation carefully before making any rash decisions.
4. Look At Your Prices
You may also want to consider raising your prices to match inflation. It can be tempting to protect your customers from rising costs, but it is something that most small businesses are doing. In fact, a recent study found that 75% of businesses are increasing their prices to help with wholesale and utility costs. So if you do raise your prices, you won’t be alone!
Of course, this doesn’t mean doubling costs and out-pricing your customers; instead, do some market research so that you can set new prices that are still realistic and affordable.
5. Talk To An Accountant
Finally you may want to consider speaking to an accountant about your financial situation. They may be able to help you with tax breaks and expenses, which can really help to make life easier.
Times may be tough, but if you adapt your business can survive. So don’t become demotivated; instead, try to be proactive about keeping your business afloat over the coming months.
If you don’t have the time to do everything on this list, one of our skilled virtual assistants can help you. Click here to find out more about how we can help.