Written by: William Robertson – The Pro Forum Community of Practice
With The current cost of living crisis gripping the world, those who run small businesses are being hit especially hard as they struggle to provide for themselves and simultaneously support their businesses. This is a growing problem for Australia as small and medium businesses comprise 99% of Australian businesses and employ 7.4 million Australians.
Research commissioned by the commonwealth banks and released earlier in the year found that one in three businesses expect a drop in sales and an increase in insurance and logistical costs. In anticipation of this, one in three businesses has already started cutting back on business spending, while another third has been cutting back on personal spending. As reported by the Small Business Organisation Australia, many small businesses are choosing to absorb the rising costs to remain competitive.
However, there is only so much business owners can absorb. Small businesses must find other solutions for dealing with this cost-of-living crisis. This article discusses three such strategies that small businesses can use to combat raising business costs.
Efficiency is key in keeping costs down, and technology plays a vital role in this. Labour is often one of the highest costs a business can have, and in the current climate, businesses need to make the most of their workforce and have their staff focused on what matters and not tied down by administrative tasks. This is where technology can pick up the slack and deal with this administrative burden. Using technology in this way can be as simple as automating emails or using programs to generate invoices and receipts. Technologies like point-of-sale systems can automatically order stock when inventory runs dry or manage customer orders and payments.
New product options
Diversifying revenue streams through new products is a surefire way of generating more income, which can be put towards combating business costs. Businesses should undertake market research and investigate what new products they could sell or cheaper alternatives to existing products they could sell. Diversifying revenue streams does not just have to involve products. Businesses can experiment with offering different services along with their current ones. However, introducing new product options can be complicated and take some effort to implement.
A third way the business can keep costs down is by empowering customer choice within their business. By offering customers flexibility with pricing that can be tailored to their budget, businesses can keep costs down. Similarly, businesses can work on selling to where their customers are. Making it more convenient for customers to purchase goods and services can increase sales. This typically takes the form of a digital marketplace but does not necessarily have to be that. An additional benefit is that this can force businesses to reflect on their operations and find ways to increase profits. Businesses should take heed that the addition of new sales channels does not take away from existing channels or the buying experience.