Life for business owners is very challenging with concerns around labour shortages, supply chain issues, interest rates rises and inflation continuing to impact business operations.
Now is an opportune time for business owners to take stock of their customer base in determining whether the business is still meeting their needs. In a post-pandemic environment, have customer requirements changed? If so, how? And how does the business need to respond in meeting some of these changes. There could be time and cost efficiencies to be made that benefit both the business and its customers.
Along with reassessing your customer needs, some other suggestions in minimising the impacts of a difficult trading environment include:
Process efficiency is essential for any business, and this could be a good time to reassess your processes to find more efficient methods available to deliver your product or service with less people. Technology is constantly changing and, with the right tools, some of the more mundane tasks could be automated, providing an alternative to trying to find staff in an extremely tight labour market.
Revisit your borrowings
As interest rates rise, businesses should review their current banking arrangements to see whether they are still appropriate for their needs. For example, bank overdrafts are more expensive to run than having a bill draw-down facility or banking covenants are not being met due to current economic requirements.
Strengthen your supply chain
Strengthening relationships with current suppliers could mean you receive preferential treatment if there is a disruption, and auditing important suppliers to ensure they have adequate scale are both useful strategies for dealing with customer demands. If inventory lead times have increased during the pandemic, consider buying and storing inventory for longer periods (while considering cashflow and increased storage space needs). A communication strategy will be needed where inventory demands aren’t being met to ensure that customer satisfaction isn’t impacted.
Idle rental space
With working from home now normalised, businesses are looking at hot desking and leasing less floor space. If this is not an option, consider reconfiguring your office and potentially entering into a sub-lease arrangement.
Saving money for a rainy day
If your business has idle cash sitting in a trading account earning little interest, consider transferring those funds into a higher interest-bearing cash management account or term deposit if there are no immediate needs for that cash.
If your business could benefit from professional advice on these matters, please contact your local HLB Mann Judd adviser.
This article first appeared in the Spring 2022 issue of Financial Times.