With inflation on the rise, we’d like to remind you to take a breath – you’ve got this.
Being business owners, we understand how inflation can impact your business and stress levels but there are ways for you to work through this challenging time.
Today, we’re sharing three tips for you to manage your business with rising costs and how we can help you with them.
Increase your prices
First and foremost, we encourage you to increase your prices to ensure you’re maintaining consistent revenue for your business. It’s a great opportunity for you to analyse your products and services to determine where you can increase your pricing.
However, there are a few things to be mindful of when making this decision. For example:
- Consider what your customers are prepared to pay for.
- If you lift your prices too high at once, think about whether you’ll become uncompetitive when compared to others in your line of business (the last thing you want is to lose customers!).
- Ensure you lift your prices in smaller increments over time instead of a significant increase at once – your customers are more likely to accept the gradual rise of your products and services.
- Communicate your price increase with your customers well in advance so they understand why you’ve made this business decision and respect the timeframe.
Reduce your costs
While increasing the prices of your offering is one way to manage inflation, we’d also recommend reassessing your current expenses and looking at ways to lower your business costs.
With your profit margin being a function of your price and cost structure, it’d be worthwhile to conduct a cost analysis of your fixed and variable costs.
We’ve provided a few tips below to help you with undertaking a cost analysis:
- Identify the essential costs that maintain your business’s overall success and the costs you can either reduce or cut out.
- Seek fresh quotes from suppliers to ensure you’re getting the best price – avoid sacrificing quality for the most cost-effective option.
- Evaluate your employees, their productivity and current salary. With productivity being the key driver to the success of your business, consider wage increases to get the best value out of your team.
- High-quality employees are difficult to come by and expensive to lose or replace – make sure you’re focusing on retaining your staff.
- Where appropriate, look at what you can outsource and what you can keep in-house. There are times there outsourcing some elements of your business can provide a better outcome but make sure you’re considering the full cost of the delivered product or service – not just the raw cost when making that decision.
Review your product or service
While it’s great to provide a range of products or services, not all of them are profitable. Conduct a review of your business offering to ensure what you’re supplying is something that’s profitable!
Seek assistance
At the end of the day, we understand how overwhelming to make big decisions that can impact the success of your business – we’re here to help you by guiding you through the process, ensuring you understand each potential scenario and how it can impact you and your business’ employees, customers and profit margin.
If you’d like us to help manage your business throughout the rising costs, please get in touch with us here.