Right now, you might be wondering how your business will cope with the pressures of inflation, supply chain disruptions, wage increases and the complexities of global trade, including tariffs.
We spoke with seasoned business consultant Trevor Flint, who shared practical strategies to help you stay ahead of rising costs while supporting your growth and profitability.
As the founder and director of Capstone Associates, Trevor Flint helps small business owners get clear on what they want to achieve and how to identify the practical steps needed to make it happen. Trevor shared these insights on what small business owners can do about the rising costs of running a business in the context of current economic and global conditions.
1 - Review your pricing
It makes sense to change your prices to keep up with inflation and rising input costs – but it’s important to communicate this clearly with your customers.
You might like to:
- Justify any price increases by highlighting added value for your customers, such as improved service or enhanced product features.
- Use tiered pricing or bundled offers to cushion the perception of your changing prices.
- Communicate transparently, as your customers will often understand if the value is clear.
TIP: Read our Common business pricing myths busted and 5 pricing mistakes and how to avoid them blogs for more information.
2 - Diversify your revenue streams
Adding new offerings could help you to tap into more opportunities from new customers and your current customer base. Consider other products or services you might be able to sell to add value and meet your customers’ needs.
You might be able to:
- Identify complementary services or products your customers are already purchasing elsewhere.
- Explore whether you could enter niche markets that your competitors may have overlooked.
3 - Look after your existing customers
It’s estimated that acquiring a new customer is five to seven times more expensive than retaining an existing one. By increasing the number of repeat sales you receive from your loyal customers, you could directly improve your profitability and reduce the costs associated with attracting and onboarding new customers.
You could:
- Implement rebooking reminders, loyalty rewards and post purchase engagement campaigns to support and better serve your existing customers.
- Offer subscription based models or replenishment reminders if you sell consumables.
- Ask your customers for testimonials or reviews to help you build trust and move new prospects faster toward a decision.
4 - Outsource and automate
Think about how you can use technology to do more with less, reducing payroll costs without sacrificing output. You might be able to automate repetitive tasks and focus your in-house efforts on what truly adds to your bottom line.
You might have some quick wins if you:
- Use automation tools for customer service (such as chatbots), payroll, inventory, and email marketing.
- Explore artificial intelligence options for some of your business processes.
- Outsource non-core tasks like IT support, bookkeeping or digital marketing.
5 - Revisit your supplier contracts
If you’re facing rising costs from your suppliers, now could be the best time to explore your options. Lean manufacturing and supplier negotiations are powerful tools for reducing cost of sales.
You might be able to:
- Request volume discounts or more favourable payment terms.
- Evaluate whether you can locally source materials to reduce shipping or tariff related costs.
6 - Consider cutting your operating expenses
You might find some ways to cut your overheads without cutting corners. Gather your team and brainstorm any cost savings you could explore together.
You might be able to:
- Move to remote or hybrid work to reduce overheads.
- Audit your subscriptions (such as software), take a closer look at how you’re using utilities and review your travel expenses.
- Invest in energy efficiency and paperless systems.
- With your marketing, you could focus on referral programs, retargeting ads, and high-ROI digital channels like SEO and content marketing.
TIP: Use our operating expenses forecast calculator to help you monitor and evaluate your business expenses.
7 - Embrace local partnerships
By working with other businesses in your area, you could leverage each other’s customer base and content to grow with lower overheads.
You could consider reaching out to your network to:
- Partner with complementary businesses for bundled offers or cobranded promotions.
- Run joint workshops, webinars or campaigns to expand reach while cutting costs.
8 - Know your numbers
Without knowing the specifics around your financials, your efforts to deal with rising costs might go to waste. There’s a saying: What gets measured gets managed.
You might need to:
- Regularly track Gross Profit, CAC (Customer Acquisition Cost), and CLV (Customer Lifetime Value).
- Identify unprofitable customers or markets and either turn them around or phase them out.
Rising costs aren't going away, but with a proactive strategy, they don’t have to derail your business. Once you explore these strategies, you might find you have more control than you first think.
Find out more
If you’d like to learn more, book your place in our upcoming Increasing Revenue and Profitability workshop, which will be presented by Trevor. You can also access a range of financial management workshops offered by the SBDC for just $20, thanks to funding from the State Government.
You can also make use of our free financial tools and templates to help you forecast your sales, calculate your operating expenses or manage your cash flow.
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