Last updated on June 17th, 2023 at 11:02 am
If you’re one of the 5.6 million businesses in the UK, you might be wondering what impact rising living costs are predicted to have on your business, profits, and customers. For many businesses, the past few years have been challenging, to say the least. From navigating through the Covid-19 pandemic to unprecedented levels of inflation, it’s no surprise that according to a recent survey, 72% of business owners are concerned about how their company will be affected.
If you’re wondering how the cost-of-living crisis may impact your business, keep reading.
Table of Contents
The cost of fuel
It’s no secret that the cost of fuel has increased exponentially recently, with the average family car now costing over £100 to fill up. Although this will have an impact on all businesses to a certain extent, it will have a direct impact on businesses that are involved in delivery, transportation, and logistics.
The cost of energy
Even if you don’t have a dedicated office space, pretty much every business is will be affected by rising energy costs. In fact, it’s estimated that SMEs have faced an average gas bill hike of over 250% in the last year. For businesses of all sizes, this is likely to have a significant impact on their profit margins. To add insult to injury, businesses aren’t covered by the energy price cap, which might mean that energy bills continue to rise as time goes on.
Transportation costs
For businesses that move goods as part of their business model, the future isn’t looking too bright. With the average price-per-haulage increasing by 15% year on year, this will have a wide-reaching impact on many businesses across the country.
Cash flow
Finally, there’s cash flow. As any business owner will know, cash flow is key for maintaining a thriving business as it enables you to meet your financial obligations and make ambitious growth plans. If you don’t have good cash flow, having a sustainable business is going to prove problematic.
How to budget for increased business costs
If you’re worried about price increases as a business, just know that you’re not alone. Although it may seem like it’s all doom and gloom, luckily, there are some easy ways to keep on top of rising costs. Some of these include:
- Switch to remote working – as well as being an employee benefit, remote working saves you heaps of cash on your office rent.
- Audit your staff – if you must cut costs, start by looking at staff and where you might be able to make cost savings.
- Change your prices or pricing structure – if your margins are taking a hit, you may want to think about increasing your prices or offering optional services that you can charge a premium for.
- Make some savvy swaps – if you can, why not see if you can make some simple but cost-effective swaps when it comes to your materials and packaging?
SMEs have a tough road ahead of them. However, by acting now to implement changes like the above, you can still ensure your business thrives.
