14 Apr 2022

The cost of business crisis

As individuals, many of us have had to tighten our financial belts in the wake of the ongoing cost of living crisis currently affecting the country. With factors such as inflation ticking over to a 30-year high, fuel prices soaring as a result of the war in Ukraine and utility bills also showing no sign of flinching, the rising cost of living is hitting all sections of society. As a result, many are currently looking to re-evaluate their financial commitments.

The latest news isn’t just grim reading for consumers and spenders – but employers too. Cornwall Consultants recently announced that SME owners are facing utility bills 250% higher than they were this time last year. We are now seeing more businesses struggle to keep their doors open as a direct resulat of the rising cost of business – with one of the latest victims being that of data giant, Sunguard UK, which went into administration as it couldn’t afford the energy bills.

Shortly following the second anniversary of the first national lockdown, businesses up and down the country had been looking forward to returning to a sense of normality after such a long time. Unfortunately, the current situation is not as bright as once hoped.

In light of this, what are the effective measures businesses can activate in order to quash the threat of the cost-of-living crisis whilst keeping disruption to operations to a minimum?

Investing in technology

The term ‘you must speculate to accumulate’ can also be applied to businesses looking to save money, rather than solely generate profit. Discovering and investing in the right technologies which can help your business save money.

Investing in AI and automation can save both time and money for a business. Processes such as a company’s credit management process can be automated for a more efficient and smarter model. AI excels at automating decisions with clear input and related output. However, if a trained employee of the company needs to think hard about each decision, don’t try to automate it.

Being forward-thinking towards new technologies has been a hallmark of entrepreneurial success in recent years, and businesses often lag behind competitors if they close themselves off to new offerings. At the same time, it is important businesses invest in the right technologies, rather than the first offering they set eyes on as this strategy could lead to investing in unnecessary and costly offerings.

Employee engagement

Everybody is aware of the current financial landscape right now and your employers are feeling the pinch as individuals themselves. They will be looking to help as much as they can to ensure their employer does not fall victim to soaring costs.

By educating and connecting with employees with daily issues such as office energy costs and how they can contribute towards saving the business money can be an effective measure in the long-term.

There are various ways to teach employees about saving energy. Small steps such as hanging posters around the office or placing stickers in strategic locations, sending out regular email reminders, or establishing regular competitions with prizes for the employees who save the most energy could all help. Regardless of the method, engaging with employees and taking the necessary actions to help the business keep its head above the rising financial waters is imperative right now.

Consider face-to-face spending

 The appetite for face-to-face business travel, client meetings and expos are slowly returning after two years of remote engagement. With the return of in-person business comes rising costs. Business leaders should incorporate their cost-saving strategy into their budget for in-person business costs – such as by booking ahead and around your budget.

It is certainly great to see more business operating in-person once again and it should be championed, rather than avoided. However, it is important to remember that costs do remain and should be considered closely during these times – as many trips may not be as necessary business traditions may dictate.

Looking forward

Nobody can be sure as to how long the cost of living crisis will drag on for, but it will not be forever. Which is why business leaders and their employees must remain calm and take appropriate action to safeguard their businesses for the future. A few simple tips and changes can go a long way in delivering this.