Should small businesses increase prices during the cost of living crisis?
Finance‚ Legal & Tech
Cold, hard winter ahead? 10 tips to keep toes warm, costs down, and spirits up
John Steinbeck once said, “I’ve lived in good climate, and it bores the hell out of me. I like weather rather than climate.” And I think it’s the same for us small businesses. Yes of course it’s always lovely to feel the sunshine on your face of a successfully traded summer. But as they say, it’s the rain that makes the garden grow, and the lessons we learn now will only serve to strengthen us for the future.
Clearly, the cost of living crisis is weighing heavily on our community though. We find ourselves facing landlords’ increased prices, inflated interest rates, and bills/materials rising to as much as ten times the usual amount¹ — so it’s hardly surprising that even the most successful entrepreneurs are shivering. But what can we do about it? How can we keep our businesses warm in the winter ahead? Here are some money-saving tips to make funds go further, and ensure we do all we can to stay positive this winter.
1. Take out the budget book
Work out the status of both your personal and business finances; when you’re a founder they’re interlinked and you are the CEO of both — which means that for a sane mind, you need to get both under control. Do a full audit and spend a day working out your income and a day doing the same with your costs (and I mean the exact numbers. This is your chance to go through any unopened envelopes, cancel standing orders and cut out anything you don’t need. Be brutal and see which levers you can pull to get these costs down). Then minus the income from your costs and that’s your profitability for the year. From that you can revise your cashflow. What’s the balance you’ll start the year on from the 1st January? Put a goal in for each month until the end of the year. Business isn’t guesswork. You’ll know what these numbers should look like. Then you can work out what you need to do this winter to put yourself in the strongest position possible for the next.
2. Light a fire under your SEO
The more time you spend on improving your SEO, the less money you’ll need to spend on advertising so it’s often a cost-effective way to bring customers to your business. If they’re searching online, you want yours to be the first business that comes up in response. Polly Buckland, co-founder of The Typeface Group joined me on an IG LIVE to help throw some light on the subject and shared some superb tips if you’re interested.
3. Have the conversations you need to have
Your goal is to keep your business alive which can mean making uncomfortable decisions and having difficult conversations. Could team members reduce their hours? Is it worth going bankrupt for Christmas drinks? Are there other ways you could thank the team instead? These aren’t easy decisions but that’s where ‘big girl pants’ come in handy!
Work out the status of both your personal and business finances; when you’re a founder they’re interlinked and you are the CEO of both — which means that for a sane mind, you need to get both under control.
4. Stop money (literally) flying out the door
It’s been said that open doors cost UK businesses an estimated £1 billion a year in wasted energy². In fact, according to The Green Age, around 35% of the energy you pay for will escape through the walls as well as the window and door gaps even if they’re closed³. Great! We’re quite literally throwing money away unless we all visit the Centre for Sustainable Energy and find out how best to draft proof our shops and studios.
5. Keep your team feeling hygge
Slippers, soft blankets or even the odd hottie, cutting back on energy needn’t mean being cold or like you’re having to sit at your desk or workbench with your coat on! Help your team feel as hygge as possible to keep spirits (and temperatures) up when they come to visit. And don’t forget to keep any furry teammates cosy too. Our office Dachshund Basil makes a superb little lap warmer (though he might be used as a draft excluder soon if he keeps on barking at the postman)…
6. Get creative with what you offer
Avoid putting all your eggs in one basket. How can you spread the risk? Try a new market or pop-up shop perhaps? Or add a new product into the mix? Ask yourself what you haven’t tried yet and give it a go. A wonderful new revenue stream could be right around the corner.
7. Stay positive
This might not be a very practical tip but my God, it bloody works. In all the rounds of funding we had to secure at notonthehighstreet or the times I’ve put my house on the line as collateral and been so terrified I could physically be sick, staying positive was probably the one thing that got us through. Talk to other founders. Make a conscious choice to spend your energy wisely, not just worrying. Be proactive. Positive people are happier and happiness promotes success. A study of 275,000 people proved this to be true⁴.
8. Share your story with customers
Be vulnerable. And brave. Show customers the difference you and your products make, and what you’re up against. If people understand what’s going on with you (the toll it’s taking on you personally) and what the repercussions are for them (losing incredible businesses like yours altogether), you’ll be amazed how much they’ll want to support you.
Be proactive. Positive people are happier and happiness promotes success. A study of 275,000 people proved this to be true⁴.
9. Make your money go further
I’ve been thinking a lot about this lately at Holly & Co. I tend to forget the difference it makes when you buy ‘invisible’ items like teabags and washing up liquid in bulk from the wholesalers or cancel subscriptions we don’t really read any more. People say it all makes a difference. So what else can we do? Conserve energy, use less, speak to suppliers to negotiate better terms (and you should set up a calendar reminder to do this every single year). Another one is to re-look at pricing. For ideas on how to do this by the way, watch our SME: SOS IG LIVE on it as my guests had some great advice.
10. Pop the kettle on and write to your MP
Now’s the time to let them know exactly what you need. Tea cosies and hot water bottles are all well and good but we need long-term change. BIRA has created a template you can fill out and send on to your MP. These might seem like small actions but added up, they really can make a big difference. Wishing you all the very best of luck. Remember, sunnier times will come again.
These might seem like small actions but added up, they really can make a positive difference. Wishing you all the very best of luck and remember, as with everything else in life, this too shall pass. Be brave as sunnier times will come again.
Source:
- Guardian article on energy and small businesses
- Startups cost of living crisis
- Heat maps study into energy loss
- The Green Age on energy loss
Images:
- ‘Love & Hope’ gloves, by Quinton Chadwick
- Budget book, by Lamare
- ‘Mind the gap’ draught excluder, by Key Lime Design
- Bobble hats, by Eka Wear
- ‘Strong, independent woman’ print, by Rosie Made a Thing