Soaring rates of inflation at the moment leaves many business owners facing real problems. If they increase their prices, they risk losing customers, but if they peg prices, they put their profits and potentially their business at risk.
Inflation hits just about everything, from raw materials to higher fuel and energy costs to customer confidence.
The hope is that it will be short-term, but with borrowing costs spiralling as interest rates rise, businesses should look at practical savings and decide:
- Are you paying for services you no longer use regularly?
- What measures can you adopt to cut energy bills?
- Can you achieve discounts with bulk ordering or cut costs by reducing excessive orders?
- Are you making efficient use of your staff?
- Can you adapt your product or service offering to achieve higher sales levels or reduce costs?
Maximise technology use
Accounting and financial technology can give you instant information on sales, costs and products and allows cloud-based apps to reduce the time needed for vital but time-consuming tasks.
This can include invoicing systems that tell you what’s been paid and other apps that help you keep track of your cashflow.
However, it is essential that you work with your accountant to understand the management information presented and pro-actively take the right action for the next 6 – 12 months, and then continually review your progress.
Examine your products and workforce
- Can you abandon or suspend certain products which deliver weak margins? At the same time, can a best seller withstand a price increase and boost profitability?
- Are you overstaffing shifts?
- Do you have lengthy processes with unnecessary steps?
- Do you really need those temporary workers?
Stay competitive and prioritise customers
Check out the competition, both locally and nationally, to see what they are charging for similar products and services.
This can often depend on different areas of the country and levels of relative prosperity. Can less well-off consumers withstand price increases?
Make maximum use of your accountant
At Lamont Pridmore, we offer a wide range of services, including strategic advice and money-saving and revenue-boosting ideas, including:
- Advising on business strategy
- Addressing your cashflow
- Maximising your profits and performance
- Pricing review, profit margins and competitor analysis
- Business growth and financing
- Minimising your tax liabilities
- Outsourced financial director service
- Developing your Life Wealth Plan
