How to Cope with the Cost-of-Living Crisis as a Small Business Owner

Coping with the cost of living crisis

The UK is facing a cost of living crisis that is affecting millions of households and businesses. Rising energy prices, inflation, interest rates and taxes are squeezing incomes and profits, while supply chain disruptions and labour shortages are hampering operations and growth.

According to Office for National Statistics 7 out of 10 businesses reported concerns for their business in March 2023, with energy prices and inflation of goods and services prices as the top two concerns.

As a small business owner, you may be feeling the pressure from all sides. You may have to pay more for your utilities, raw materials, transport, and staff wages.

You may also face lower demand from customers who are cutting back on spending. You may struggle to access finance or credit as lenders tighten their criteria. And you may have to deal with more red tape and uncertainty as the UK adapts to new trading arrangements with the EU and other countries.

So how can you survive and thrive in these challenging times? Here are some tips that may help:

Review your costs and budget:

Identify where you can save money by reducing your energy consumption, switching suppliers, renegotiating contracts, outsourcing non-core tasks or using technology to automate processes. Also look for ways to increase your income by raising your prices (if possible), diversifying your products or services, expanding your market, or offering discounts or incentives for loyal customers.

Seek financial support:

Check if you are eligible for any of the government schemes that aim to help businesses cope with the cost-of-living crisis. These include flat payments of up to £1,350 for eligible businesses in 2023; an energy price guarantee that caps the unit costs of electricity and gas until March 2024; a temporary reduction in business rates for retail, hospitality, and leisure sectors; a new recovery loan scheme that offers up to £10 million in finance; and various grants, tax reliefs and export support programmes.

Plan ahead:

Anticipate potential risks and opportunities that may arise from the changing economic environment.

For example, consider how you will deal with further increases in inflation or interest rates; how you will manage your cash flow and working capital; how you will source alternative suppliers or staff if needed; how you will adapt to new customer preferences or behaviours; and how you will comply with any new regulations or standards that may affect your sector.

Seek advice:

Don’t hesitate to ask for help from experts who can guide you through the cost-of-living crisis. You can access free or low-cost advice from various sources such as local enterprise agencies, trade associations, chambers of commerce, accountants, solicitors, or mentors.

You could also network with other small business owners who may be facing similar challenges and share best practices or solutions.

Need to speak to someone?

If your company is struggling with unmanageable debts, poor cash flow, or an uncertain future, you are not alone. We speak to company directors struggling with the same issues as you every single day, and we are here to give you the help and guidance you need.

Call our team for free, no-obligation advice today on 0800 975 0380 or book a free consultation