“No matter how tough things get, the business owner who takes stock of the lessons they learn is the one who will take their learnings and use them to build resilience and innovate.”
So says Andrew Maren, serial entrepreneur and CEO of ProfitShare Partners, the Fintech company that has disrupted how SMEs gain access to capital. “Little is more valuable than a personal experience for an entrepreneur,” he notes, adding that “the toughest times can be what builds the toughest companies”.
ProfitShare Partners shares three important issues currently impacting companies of all sizes, around the globe, and offers tips on how best to cope.
Financial restrictions: Cost of living and working on the rise
With the energy crises hitting companies worldwide, the cost of running a business has increased and is, according to business leaders, likely to continue to rise for a while. How can you reduce this impact on your company?
- Implement regular in-house financial audits – By checking your company’s spending, you can keep track of where you could be saving and where extra budget may be used for a better return on investment (ROI). You can only cut costs if you know what you’re spending and how lowering your spend will impact your operation.
- Hybrid working is a reality. Are you geared for it? – Small businesses that allow staff to work from home for a certain number of days or hours a week may find they can save costs by moving to smaller premises. Certainly, staff members save money on transport costs, so if you have geared up for hybrid work, make the most of it. Consider sharing offices with a business associate who runs an SME and splitting the costs.
- Raising your prices – with consumers and businesses facing rising prices, this should be a last-resort option. However, you will need to meet higher costs you may be paying your supply chain, and an increase may be inevitable. Try not to raise prices too much or too quickly. Speak to your customers regularly and let them know an increase may be on the cards, which enables them to get their house for a greater spend. Remember, when times are financially tight, your customers may have to choose lower prices from your competitors, so be open and fair with them.
Maren suggests you review 2022 carefully at year-end, and see where you may be able to make changes in 2023 that keep cash flow up. “Take a look at banking fees and see if another bank will give you a better deal. If you’re in manufacturing and can make a product of the same quality, you do now, but with cheaper materials, try it out before switching over entirely and potentially losing clients.
“Never trade quality goods and services for ‘this will do,” Maren says. “Just as you want value for your money, your clients do too – and being upfront with them on any changes you are going to implement to save costs will garner more loyalty from long-term customers. And right now, loyalty could be the one thing that sets you apart from others in your sector.”