4 Ways to Combat the Cost of Living Crisis as a Business
As the cost of living crisis rises, more and more businesses are feeling the strain. With inflation at its highest rate for 40 years, and energy bills soaring, many business owners are looking for ways to cut costs.
Everyday essentials are rising, wages are failing to keep up, and many consumers are struggling to make ends meet. This is having a knock-on effect on businesses, as customers cut back on spending and turn to cheaper alternatives.
So how can your business manage the cost of living crisis?
1) Assess your outgoings.
Reviewing your businesses direct debits or subscriptions is a good start when it comes to cutting costs. You could be paying for things you no longer require or use, so by conducting a direct debit audit and assessing your outgoings, you may save a significant amount of money. You can cancel direct debits and standing orders when you like, but before you do, make sure to check whether you’re in contract before cancelling. If you’re in a contract, cancelling may be a breach, so check the paperwork first.
2) Review energy use.
Many businesses are struggling with no cap on their energy bills, causing astronomical increases so every little change can truly make a difference. Some simple procedures you could implement to reduce energy waste include:
- Check any heaters or air conditioning units are not left on when the premises is empty.
- Consider switching to motion sensor lights if lighting is not needed continuously in certain spaces.
- Encourage all employees to turn off any electrical equipment at the end of each day.
- Don’t forget kitchen equipment – are seals on fridges in good condition? Are kettles used to only boil the water that’s needed? Is the coffee machine/fridge energy efficient?
3) Speak to your suppliers.
If you want to know how to negotiate the cost of your purchased products with a supplier, you’ll first need to do a bit of research. By getting to know your supplier, what they offer, and who they are, the easier it will be to attract their interest in your negotiation. If you ask for too low a reduction that the supplier won’t earn anything from, they won’t accept it. Make sure to:
- Use the right tone.
- Explain your situation clearly.
- Provide incentives.
- Talk to multiple suppliers to encourage competitive prices.
4) Consolidate suppliers.
If all else fails, you could consider transferring all your business to one supplier. Suppliers love business owners who order a lot of products from them, and often those people get larger discounts and other perks from the supplier. If you’ve been giving your business to multiple suppliers, consider transferring all of it to one company. However, before you make the transition, call the supplier, and talk to them about increased discounts in exchange for all your business.
It’s hard to imagine a brighter future with alarming headlines and predictions of a recession for 2023 but prosperity is not off the table. While the cost of living crisis impacts businesses and is expected to last until 2024, it won’t last forever.
A cost of living crisis can be challenging for businesses, however by being prepared and making the right decisions, you can help your business to adapt and thrive.