Households across the UK are struggling with the cost of living. Inflation has risen by 9% – the highest in 40 years. If you’re a small business owner and worrying about what this means for you, don’t worry. We’re here to help. We know it’s been a tough couple of years for you and we like to help wherever we can. We’ve put together a cost of living crisis business survival guide to help you limit the impact on your business.
What is the cost of living crisis?
Ask any adult in the UK what’s causing the current situation and they’ll probably say energy prices. But even before the hike in energy bills, rising global commodity prices and a tough labour market pushed up costs.
The UK government borrowed billions during Covid lockdowns to hold up the economy. But now with repayments needing to be made, tax rises and spending cuts are on the cards to balance the books while wages remain stagnant. This, combined with the impact of inflation, is squeezing household incomes and hitting disposable incomes hard. So, what can we do about it?
Start with your bookkeeping
It’s essential to keep good records of your business’s incomings and outgoings. Get into the habit of keeping track of everything weekly or monthly so you don’t get behind. If you’ve just invoiced a customer, record it in your bookkeeping. Better than that, keep a record of what you’ve sold, when you’ve sold it and how many. This way you can watch trends and see clearly which of your products and services are best sellers. You can then push them accordingly. To help you keep on top of your bookkeeping, we include a QuickBooks subscription in our accountancy plans which makes it super easy to keep on top of. You can keep on top of trends using their ‘tagging’ system. If you’re interested in us doing your bookkeeping for you, contact us here.
Use technology as much as possible
In our previous point, we already mentioned the use of QuickBooks. Using technology (although another expense) will make your business more efficient. The more efficient your business, the fewer mistakes and the more profitable it will be. If you sell items in a physical store, see if you can bring these online to your website. Consider using HR management platforms such as Monday.com. Acuity Scheduling is fabulous for online bookings. Have a good look through the systems you already use and see how you can streamline everything.
Increase your revenue from existing customers
Acquiring new customers requires spending money and/or time on marketing and is often where most businesses focus all their attention. By doing this, you could be missing opportunities right under your nose. You could encourage repeat custom by offering a loyalty scheme. You could train your staff on upselling your products or services. Or you could ask for their opinions on upcoming products on social channels. A customer who has already bought from you is your warmest lead.
Review your spending
We would suggest checking over all your expenses. You don’t need to go crazy as you need your business to run efficiently but just check over everything and make sure you’re not unnecessarily paying for things.
Expand revenue streams
Are there other services or products you could be offering? For example, if you’re a tree surgeon could you offer white-label gardening? If you offer social media management could you sell resources online? If there’s a product or service customers ask for recommendations on a lot, think about how you could start offering those.
Look into available government help
The government is currently offering the Energy Bill Relief scheme for small businesses. All current cost of living support can be found here. Make sure you’re applying for anything and everything you’re eligible for. If you’re not happy with the current help being offered, remember you can email your local MP.
Review productivity
Sometimes you have to spend money to acquire money. That might seem counterintuitive but bare with us. Consider training staff to do additional tasks – are these tasks you could then charge at a higher rate? Review your equipment and see if anything could be replaced or upgraded – it’s much more efficient from a business point of view to replace things before they go wrong or before you hit capacity.
Are you as tax efficient as possible?
You might want to consider changing your business structure from sole trader to limited company. If you’re not sure which would be best for you, read our article here. You may also want to consider voluntarily registering for VAT. Normally you would only need to register once you reach a certain threshold but you can volunteer to register before then. By doing so you’d then be able to reclaim any VAT you pay on purchases. You would have to do the maths to know if this would be worthwhile or alternatively, we’d love to help you.
We hope this cost of living crisis business guide has helped you!
