Undoubtedly, the economy is on a precarious path at the moment. Muddled up in a cost of living crisis, the future is uncertain for many companies across the country. Whether you’re a start-up or an established conglomerate, the struggle remains the same: how do you weather inflation as a company, when the cost of living is so high? Customers can no longer afford the products and services they once enjoyed, which puts your bottom line at risk.
More often than not, it feels as though the economy is fighting your success! Fortunately, there are strategies you can take to keep your company afloat.
It may seem like common sense, but spending wisely isn’t as easy as you might think – particularly when you’re running a complicated, diverse business. When inflation rises, start thinking about strategic spending. Instead of trimming funding from everywhere in your company without consideration, ensure you direct funds to the departments that need them in the long-term. Sometimes, strategic spending involves funding your employees and their training! Scarce resources, when deployed appropriately, still improve a company’s value.
Automate where possible (virtual resources, like free accounting software and remote working)
In times of economic crisis, such as the rising cost of living, automating your financial intelligence with tools like Xelix can secure the future of your company. For example, something as simple as investing in automated reporting, a tool that can collate all payables data, helps drive smarter decision making for your company’s finances. Save on costs in your supply chain, predict the impact of inflation on your business, and devise strategies to stop it!
End outsourced contracts (X third-party contracts, chop out ‘unnecessary’ services)
In businesses of all sizes and trades, you often find a great scope of third-party contracts. These contracted workers complete a range of day-to-day tasks, in lieu of an in-house team. But, third-party workers are quite the expense. Consider chopping unnecessary outsourced services to minimise running costs. Instead, automate vital tasks or relocate them to in-house staff!
Scale back growth plans
If you had plans for your business to take off abroad, or triple in profit by the next fiscal year, consider scaling back your growth plans. This isn’t a loss, but a wise calculation for the longevity of your business amidst a cost of living crisis. Conserve cash, and opt for a ‘slow and steady’ strategy whilst inflation is bad. At this time, not many shareholders will invest, and instead of focusing on new product development, improve and fund what you already have.
See what your company can claim
For smaller companies, such as a budding start-up, the government lends a hand to ensure you weather the storm of inflation easier. Even though you may not be eligible, it’s worth seeing what your company can claim! Certain firms have been able to claim £5000 off their employer National Insurance Contributions, which have been steadily increasing.
With these five strategies in mind, businesses will have the tools they need to weather the current cost of living crisis, or at least reduce the negative impact on their finances.