Keeping a handle on business overheads in a cost of living crisis
WEDNESDAY 26TH JULY 2023
The cost of living crisis has impacted us all, but simple changes can make a big difference for businesses and individuals
The cost of living crisis is still ongoing. Last year in the UK, the price of consumer goods rose at the fastest rate in four decades. Surges in the cost of essential items, rents and mortgages, utilities and transportation have a direct impact on a company's operating costs. When facing such conditions, businesses must take a proactive stance to maintain stability and profitability.
It’s easy and understandable to feel powerless at a time when costs are constantly on the rise, but there are steps businesses can take in order to keep a handle on overheads and spending as the crisis continues.
Here are five factors to consider when trying to effectively manage business cashflow during the cost of living crisis.
Start with a cashflow forecast
Preparing a cashflow forecast for your business will help you identify any potential risks or holes in your finances, allowing you to take steps to mitigate them. Good cashflow is essential to making sure you can meet your financial obligations, so if you’re going to struggle to cover your outgoings, it’s best to know as soon as possible so that remedial steps can be taken. This could include reassessing rent payments or salaries, marketing costs or office supplies.
A regularly updated forecast provides a clear picture of your current financial situation. If necessary, you can then set aside some of your profits into a contingency fund to cover any unexpected or unforeseen costs.
Reduce your utility costs by comparing the market
Utility costs can eat into business profits, especially with prices rising at a rapid rate. The energy crisis, in particular, has made it more important than ever to keep a close eye on unit charges, contract terms and any relief schemes available. For example, many organisations in the UK are unaware that they are eligible for relief from the Climate Change Levy (CCL) – a charge that is applied as standard on bills.
Managing usage over the course of the year is also essential. A reputable business utilities provider will not only help you save money on your utilities but also help to manage usage in the most efficient and cost effective way.
The same is also relevant when considering utilities such as water, waste and telecoms.
Be transparent
Burying your head in the sand isn’t going to help anyone in a tough economic climate, so it’s important to be honest about how your business is faring. Tell staff whether the company is struggling, and give them the opportunity to air any concerns or questions they may have.
Being upfront about what’s changing and why will help to build trust and loyalty between you and your customers.
Maintain good relationships with your supply chain
Things are probably tough for your suppliers right now, too. So it’s more important than ever that you maintain a strong and trusting relationship. If you’re experiencing financial difficulties, tell them. They may well be open to renegotiating terms or lengthening contracts to retain your business. Bulk purchases may also be recommended – particularly when it relates to goods or services that are likely to increase in price over the coming months.
Review your products and services
There’s never been a better time to review the products and services you offer. If you’re carrying dead weight – i.e. offerings that are time intensive and not profitable – then now is the time to shed them. Focus on your most popular and profitable services, and reconsider anything that isn’t selling well in order to save on costs.
This will help to make your business leaner and more efficient as the cost of living crisis continues. Good financial management will help your business not only survive, but grow in the future.
Get in touch with Everflow today
If you’re looking for a multi utility provider you can trust, you’re in the right place. At Everflow we are dedicated to helping organisations save time and money on their utilities. Get a quote today and find out how much you could be saving.