Maintaining a profitable business in the midst of a cost-of-living crisis is a multi-faceted challenge requiring many aspects of consideration. Firstly, you are forced to assess your own prices due to an increase in materials or resources; in order to keep margins in place, there’s a strong chance your prices will need to increase. This bears a trickle-down effect, forcing you to question how your clients will respond to these increasing prices. Secondly, you have your staff to think about, and their requirements for consistent payment reflecting the economic climate we are all trying to negotiate. Here is our guide on how to handle these challenging times, with thoughts towards every respective aspect of your business.
Changing your Price Tags
It is highly likely that your business has been hit by a staggering increase in overhead costs. Whether it be an increase in supplies or general bills, many businesses have faced a cross-roads scenario of decreasing profit margins as a result of increasing overhead and supply costs. In turn, the inevitable next step is following the pattern you have been affected by and increasing your own costs to reflect the shift in your own business’ costs.
However, whilst this is a justified stance towards maintaining a profitable business, it is worth considering how you could reduce the amount you’re spending – even if you are firmly set upon increasing your prices, this could still be an effective way to boost your profit.
For instance, research how much cheaper supplies may be if you switch manufacturer or purchase stock in higher volumes. Do you really need to use a legacy subscription service such as an online accounting tool, or payments for premium social media services? This could prove to be an instant boost to your savings, thus compensating for the general increase in costs. If you still need to change your price tag, at least you have a little bit of flexibility when it comes to maintaining your client base, without making a stark change which is likely to deter your existing book of contacts.
Maintaining Client Loyalty
Every business prides itself on customer service, whether it be in the context of trading from business to business, or directly to the public. Therefore, increasing your costs may be a tough mountain to climb when it comes to keeping your existing customer base on board, especially in light of the financial challenges they are likely to be facing themselves as a result of the cost-of-living crisis.
Although you may be looking to increase your prices in order to reflect the internal incline of costs you are facing, it may be worth considering the benefits of remaining with a lower price point: ultimately, in the current climate, the cheaper products are, the more people they will attract. For your existing clients, displaying a loyal continuation of your prices will make you appear to be a reputable, respectable business whom they will place trust in, therefore making them likely to continue using your services. A lower price point is also likely to attract new clients who have been deterred by the increases other businesses have put in place, thus boosting your overall sales.
Whilst it may feel as if you are forcing yourself into making a loss by maintaining your prices, if you market yourself efficiently, there is a change you will flourish as a result, increasing your client base and therefore seeing your business meet prosperity.
Be a Credible Employer
If you have been impacted by the cost-of-living crisis, your employees are likely to be facing their own difficulties. Of course, their first request will be a wage increase to reflect the increasing costs of food, fuel, general bills, and day-to-day living. If this is something you can’t facilitate, there are some other solutions you can adopt to give them a helping hand.
If you are an office-based business, you could promote working from home days, allowing staff to cut down on transport costs, or encourage a subsidised programme for food provision in the office, such as a discounted deli, or affordable refreshments. It is imperative to listen to your staff’s concerns and reassure them that they are being heard.