With inflation starting to take effect in the UK Economy and forecasts for 2023 going up as high as 18% (Citi Bank forecast Spring 2023), rates are getting close to figures not seen since the 1980s.
Because you may not have experienced managing a business with such high levels of inflation, we’ve pulled together a checklist that will help reduce its effects on your business.
Take a look, and if you need any help on this or any other areas of your business, just get in touch with Darren.
Rapid inflation - What does this mean for your business?
Clearly, in these uncertain times, it’s a good time to plan ahead.
Here are a few ideas to help remain resilient to the effects of increased inflation:
- Review your Budgets and set realistic and achievable targets for the remainder of 2023 and into 2024.
- Get rid of “Won’t pay” customers.
- Review debtors lists and chase up overdue invoices.
- Make sure your terms of business clearly describe your payment terms. Remind your customers what they are.
- Assign responsibility to one individual for chasing overdue invoices and collections.
- Agree on extended payment terms with your suppliers in advance.
- If appropriate, review banking facilities and discuss future needs.
- Put extra effort into making sure your relationships with your better customers are good and solid.
- Review and create a flow chart of the main processes in your business (e.g., sales processing, order fulfilment, shipping etc.) and challenge the need for each step.
- Encourage your staff to suggest ways to streamline and simplify processes (e.g., sit down and brainstorm about efficiencies and cost reduction).
- Use ‘bottom up’ budgeting where everyone in the office gives input on areas over which they have control. Target at least a 10% cost saving. If you need help with this, talk to Darren.
- Review your staffing needs over the next few months. Can you make any savings or use your team more efficiently?
- Get your members of staff involved in a discussion of likely trading conditions and get their input on reducing costs and maintaining revenues.
- Review your list of products and services and eliminate those that are unprofitable or not core to your operation. Now is not the time to explore fringe product or service areas. If you need help on this, contact Darren.
- Identify ways to strengthen sales performance by improving customer relationships and how your customers engage with you. E.g., customer reviews – take time to learn more about their business and their current challenges, identify opportunities to cross-sell/up-sell, and consider how your customers pay you. Talk to Phil Bean for more advice and guidance.
- Establish your key performance indicators (KPIs) and measure them on a regular basis. Weekly is a good idea. Here are some ideas of the things to look at (again, talk to Darren if you need help setting them up): sales leads generated, sales orders supplied/fulfilled, cash balance, stock turnover, debtor days, gross profit & net profit.
- Finally pull all your team together and explain why you have chosen your inflation business strategy and get their buy-in.
We have considerable experience helping clients with their strategy and sustainability during turbulent or difficult times.
Please get in touch for a free consultancy visit to talk about planning ahead for things like the effects of increasing inflation.