How your business can survive the cost of living crisis

The cost of living crisis has affected us all over the past couple of years, creating particularly challenging times for small business owners across the UK and beyond. Given that there are no signs of the situation improving in the coming months, learning to cope has become essential for survival.

Research from the Federation of Small Businesses estimates that a total of 370,000 SMEs will be forced into closure or significant downsizing as a direct consequence of the ongoing economic crisis. While there is no way to guarantee sustained success in these difficult times, implementing the right strategies such as using the best live chat solutions for websites will go a long way to helping.

What is causing the cost of living crisis for businesses?

While the cost of living crisis is primarily thought of as an issue affecting consumers, it has huge implications for businesses too. As well as facing increased operational costs, companies are negatively impacted by the fact that consumers have to take more care with their spending.

The key factors behind the cost of living crisis for businesses are;

• Inflation that leads to increased material costs.
• Increased energy costs that affect on-site operational costs.
• Increased energy costs that result in hiked transportation and shipping costs.
• Reduced financial support from the government.
• Increased equipment costs and commercial building rentals.

Worse still, no sector or company is exempt from feeling the force. As such, only a dedicated response can help you survive.

8 great tips to help your business survive the cost of living crisis

1. Increase your prices

Perhaps the most obvious way to combat increased expenses is to boost your revenue by charging more money for your products and services.

The annual rate of inflation isn’t as high as the 11.1% peak of October 2022, but it still stands at over 6%. While you must avoid the risk of pricing customers out of making purchases, the harsh reality is that most small businesses have been forced into increasing their prices. If you continue to resist following suit, it could potentially spell disaster for the business due to virtually non-existent profit margins.

2. Save money on communication costs

Communication sits at the heart of every business. Get it right by embracing the latest tech facilities and you won’t only cut your expenses. You’ll also save valuable time.

Firstly, promoting smooth client communications through the best live chat solutions for websites allows you to solve client problems in the quickest and most convenient manner. So, you’ll save money while simultaneously improving the business, which can only be good news for an SME owner. When combined with team messaging and video conferencing for internal communications, a noticeable improvement will be enjoyed.

3. Cost compare your ongoing operational expenses

The harsh reality is that you cannot stop the fact that materials now cost more than they once did. However, you can reduce the impact by finding better suppliers.

It’s likely that you’ve started spending money more tactfully in your personal life. Now is the time to make calculated purchases in business too. Switching to a new energy supplier or tariff could save you a small fortune. Meanwhile, opting for domestic supplies and using a courier that lets you run partial truckloads with another company can serve you well. Cutting costs that do not impact the customer’s product or service will deliver stunning results.

4. Focus on existing customers

As a business owner, you will have a natural desire to grow your audience. However, it’s your existing customers that provide sustainability, especially at this time.

Firstly, new customer acquisitions are anywhere between five and 25 times more expensive than remarketing to existing clients. You already have a lot of valuable data and insights relating to existing clients, which can open the door to upselling. For the best results, offering loyalty discount schemes and cashback rewards is advised. This will keep customers coming back for more and help you boost their customer lifetime value figures.

5. Outsource cyber management

On the face of it, outsourcing may seem like an additional expense. In reality, it could be the key to reducing your costs in several key business areas.

Hiring outsourced IT teams doesn’t only save you from hiring in-house teams. It also reduces your requirement for additional space or equipment, which saves you money in the long run and offers more flexibility regarding future expansions. It also means you’ll gain the support of dedicated teams that know ISO 27001 and key information security and cybersecurity features. After all, the financial repercussions of a breach would cost you dearly.

6. Make purchases more accessible for customers

Sadly, many customers who would want to buy your products and services can no longer afford to due to their own financial struggles. At least not under the current pricing plans.

However, you can keep the door open to a larger audience base by using repayment plans. Whether it’s accepting PayPal, which provides its own credit terms for customers, or payment gateways that offer 0% interest when spreading the costs is up to you. As long as you take the precautions, such as credit checks, needed to avoid defaulted payments and bad debt, you’ll be fine.

7. Invest in employees

Employees are your greatest asset, and you will need them now more than ever. To keep them on side, you must show an understanding of their situations too.

If you can afford to give a pay rise in line with inflation, that’s great. If not, there are other ways to keep employees motivated. Giving them added responsibilities, investing in staff training, providing perks, offering commission bonuses, and allowing them to work from home are all possibilities. When workers are engaged, productivity will soar and client interactions will improve. These are key factors for getting through these tough times.

8. Raise money

If you have a solid long-term growth strategy and simply need to plough through these difficult moments caused by the cost of living crisis, raising money may be the answer.

This could come courtesy of a business loan, private investments, crowdfunding, or equity investments. Either way, it will buy you some extra time during these testing moments and allow you to make the necessary updates to futureproof your venture. When the cash injection is used efficiently, it can help keep your venture on the road to sustained success. Moreover, you’ll be ready to act with confidence.

The final word

There is no escaping the fact that the cost of living crisis will put financial pressure on your business. Thankfully, with the right strategies in place, you can significantly boost your chances of coming through these difficult times unscathed.

To learn more about the best live chat solutions for websites and how they can support your SME through the cost of living crisis and beyond, get in touch with the Click 4 Assistance team today.