No one is unaffected by the cost of living crisis affecting countries across the globe, and the world of business is certainly no different.
Inflation rates in the United States were at 7.7% in October 2022, resulting in your business having to contend with rising interest rates, while there are supply pressures as a result of having to pay for products and materials – not to mention the impact on shipping and delivery prices.
This can have a direct impact on your purchasing power but there are ways to keep your business strong while combatting inflation.
Pricing audits
First and foremost, it is time to keep control of your spending – now is the moment to really examine your costs.
Garner information from account transactions, whether that be from the credit card, the bank, or accounting software. Use a spreadsheet to list your supplier spending from highest to lowest.
Once you have an idea of your average spend, consider how to reduce costs with your largest suppliers (bulk orders or cutting additional purchases for example) or remove the smaller suppliers whose services you are barely using anymore.
Additionally, avoid where possible increasing all your own prices at once – think instead about promotions or discounts you are offering that you may wish to amend.
Relationships with external partners
Consider also how you can capitalize on strategic partnerships with your external partners. In this time of uncertainty, it has never been more important to think about cost-saving measures.
Use memberships to guarantee competitive prices at fixed rates such as Vista’s private air travel programs. Think too about loyalty schemes or sharing and streamlining resources.
In essence, strategic partnerships will go a big way to reducing costs and tackling overspending as you look to combat the effects of rising inflation.
Increase your efficiency
Efficiency is doing better than what is already being done and right now it is vital to be nailing the fundamentals of what makes your company tick.
There are many steps to improve your efficiency. Consider your inventory management, and keep a regular check on your stock to prevent it from becoming unsaleable. Good inventory management with automated ordering and systems will enable your staff to keep on top of stock.
Think also about how you can eliminate multiple supplier sources. Doing so from a single supplier will help to lower costs, thus helping to trim those overheads as a result of reduced administrative spending. Having backup suppliers would be a wise move as a failsafe should your regular supplier be unable to meet your needs.
And take time to really strengthen your administrative operations, using cloud or internet technologies to do so. In 2021, Microsoft and Azure reported a 50% increase in the use of cloud technology as people moved to a hybrid model of working amid the coronavirus pandemic. Having such technology allows you to have systems that are readily accessible from wherever you may be and it can also be beneficial to lowering transaction costs.
At a time when inflation is impacting all businesses, improved efficiency will help drive down your spending.