How do I adapt my business strategy in a cost of living crisis?

We’ve all heard that phrase “cost of living crisis” for a little while now. Navigating these times can be daunting for small business owners. With the pressure to balance rising expenses and maintain cash flow, it’s understandable if you’ve lost sleep over financial worries. But don't lose hope—there are effective strategies to stretch your dollar further without simply cutting costs.

Regularly Review Your Costs

Understanding exactly where your money is going is the first step to finding savings. You might be paying for services you no longer use or that aren't adding value to your business. Scrutinise your financial statements closely. You could uncover forgotten subscriptions or unnecessary expenses that, although small, add up over time.

Look for Deals

Once you've got a handle on your costs, assess whether you're getting the best value for your money. When did you last review your service providers? Can you negotiate better rates or find better deals elsewhere? As a small business, especially if you’re a one-person operation, you might qualify for lower rates on individual plans, so always check you’re maximising your potential savings. Co-operative purchasing is another option for some industries - becoming a member of one of these can give you access to lower pricing.

Enhance Revenue Streams

While cutting costs is essential, increasing your income can have a more significant long-term impact. Consider boosting your marketing efforts. Though it may sound counterintuitive, investing in marketing can lead to increased sales, ultimately enhancing your cash flow.

Manage Receivables Efficiently

Ensuring timely payments from clients is crucial. Implement direct debit systems, enable invoice reminders through your accounting software, and consider asking for deposits. These measures can improve your cash flow, especially during tough times.

Strategic Cost Management

Avoid indiscriminate cost-cutting, which can stifle your business’s growth. Focus on retaining staff and seek alternative areas to reduce costs or boost revenue. Reevaluate your pricing strategy in response to rising costs and inflation to avoid absorbing the impact.

Stay Informed About External Factors

Understand the external influences affecting your customers’ behaviour. Empathise with their needs and adjust your offerings accordingly. Stay aware of your competitors' strategies during these challenging times, using their tactics as a benchmark for your own.

Leverage the Power of Data

Data-driven decisions are essential in uncertain times. Rely on actual business data to form strategies rather than assumptions. Accurate financial data is key to making informed choices, and Wellington accountants can be instrumental in this process. They provide insights and guidance, ensuring your business remains financially healthy.

Partner with trusted accountants

Working closely with Affinity’s Wellington accountants can be transformative. Our clients appreciate our expertise in interpreting financial data, understanding market dynamics, and providing guidance with big decisions. Don't hesitate to contact Affinity Accountants - your Wellington accountants - for support and strategic advice as you navigate the cost of living crisis and beyond. We're here to help you thrive!

Contact us for advice specific to your situation.

Affinity Accounting is a team of Wellington Accountants who love to help small businesses realise their potential.

What our clients say

“Affinity Accounting provide an excellent and friendly service with clear advice and support. They have been invaluable in helping me set up my business and lay the bedrock for a profitable future.”

-Ben Heaven