We live in uncertain times: from growing inflation, to galloping energy prices, to strikes and logistics issues to the price of food. For anyone running a business, there are a lot of challenges. Increased costs for you and less money for your customers to spend.
Today we’re taking a look at what this uncertain future can mean for businesses, and what you can do to protect yourself and your employees going forward.
Cash
In times of inflation, you need the ability to be flexible in your spending: to seek deals and opportunities, to adapt to these changing times. The value of your money also goes down: more cash buys less.
This means it’s important to keep more than sufficient reserves both safely and in a liquid, spendible form. There are various ways to build your war chest – but let’s look at two of the biggest.
Cut spending where you can, but prioritise your cuts carefully. Savings that impact your ability to provide the service or products you’re known for to your customers are a false economy, and will hit your revenue streams for more than they save you. It might be time to reconsider how much you spend on R&D or expansion – these efforts get more risky in times of high costs and high inflation anyway so you’ll want to make sure you’re only committing funds when you have a far better than normal chance of return on that investment.
You should review your exposure to debt: if you often offer credit, or flexible time scales on repayment to clients, it may be time to tighten your processes. That kind of flexibility can come back to bite you when everyone’s approaching their financial red flags. Make sure you can rely on the money marked as coming in.
Flexibility
In other ways, flexibility is vital. You need to be able to accommodate changes to your established strategy in unprecedented times: growth may become much less important for your business as you reduce spending – or much more, as your search for a broader, more stable customer base.
The most important thing is to be able to distinguish good strategy changes that are necessary because circumstances are different to when you set your strategy initially, to bad changes that undermine the values your business is based on. Strategy consultants can help you here: while it’s an expense, it may be a necessary one to help you find a path forward that maintains the core offer of your business and brand. If you’re looking for a strategy consultant London has plenty of options for different industries and needs.