This year, UK consumer price inflation has reached 10.1% — its highest rate for over four decades, as the Startups website reports. Unsurprisingly, the increased inflation has taken its toll on SMEs — but, if you run one, you can still steer it towards a financially healthy course.
Here are several steps you can take to help lessen the strain of inflation on your SME.
Increase prices, but be judicious about it
Claire Tasker, founder of the Hertfordshire-based business Claire Tasker Jewellery, recently told the Startups website: “I really don’t want to have to raise my prices but, long term, my current prices just aren’t sustainable.”
If you are in Claire’s position, you could think about raising prices only gradually, and ideally on your less popular products or services.
Switch to a subscription-based payment model
With financial experts having warned that we can expect high inflation for the long haul, you could consider beginning to offer a range of subscription-based pricing plans.
That way, you can budget more confidently for the future, as you will have a better idea of how your corporate finances should shape up over the coming months.
Rent a serviced office
The Startups website defines a serviced office as “a workspace which comes ready-furnished, with internet and phone lines preconnected and devices already equipped.” When you rent a serviced office, the office provider can handle the facilities management costs.
SMEs don’t even have to compromise with the visual appeal of their workspaces; consider, for example, the case of the serviced offices in Belfast’s recently refurbished Custom House.
Audit your staff and their working hours
Another good reason to consider renting a serviced office is that it could give you more flexibility in how you are able to scale your workplace up and down in response to staffing changes.
Alas, you might feel more inclined to drop employees than recruit them in the current economic climate. However, one alternative cost-saving strategy could be to simply rein in existing employees’ work hours.
Reassess your profit margins
This advice comes from ecommerce entrepreneur Sam Barrante, who adds as quoted by American Express: “Start by reevaluating your costs and then analyse what margins you are facing in today’s economy.”
The next step would be to “start looking into solutions to increase those margins, while continuing to ensure quality products and services.”
Stock up on supplies in advance
Since you can’t be certain that inflation won’t be even worse a few weeks or months from now, it could prove financially convenient for you to source various core materials early, before they get a chance to increase even more in price.
Prepare for an influx of new customers
“Inflationary periods are unnerving to many,” Stuart Robles, the co-author of The New World of Entrepreneurship: Insiders’ Guide to Buying and Selling Your Own Business in the Digital Age.
“As a result, customer segments and market niches previously unreachable can become attainable as your company is seen as a beacon of light in terms of potential lower prices and rates.”