I set a bunch of self-development goals this year. One of which was to get a better understanding of money, and the economy as a whole. Primarily, because this is going to be an impending theme of 2022.
We’re not really taught financial skills in school. Even if you study business, you only touch very briefly on economic factors.
Aside from that, even those of us who were taught some economic skills, may be feeling a certain element of stress when it comes to the financial pressures that both businesses and individuals will face this year.
We’re reaching a sort of optimistic plateau when it comes to the pandemic. Omicron “wasn’t as bad as we thought it would be”. That said, it really feels like we’re out of the fire and into the flames.
We emerge from the chaos, only for Brexit, wage inflation, supply cost inflation and supply chain issues to pop up and ambush us like a veritable mafia of financial woes.
So given we’re in this position, how can a business make the correct decisions in order to survive?
Here are a few of the key ideas, that we think will have the biggest impact on business survival and cost reduction.
Consider a Digital-Led Model
We have no desire to see the death of the humble in-person shopping experience, but we do see the enormous benefits of a digital-led business model.
So how exactly does that translate?
Well let’s say your a manufacturer. The majority of your costs will be in production, energy bills and wages. Those things, you can’t really change too much (but you could implement some of the energy saving tips from our last blog!).
However, when it comes to your back-office costs, there are plenty of ways you can make savings by going digital.
Consider how improving your website and online presence could help you to bring in more customers without having to put more sales people on the ground.
You could hire a digital marketing apprentice, for example, and after just a few months, they’d have the skills to build and manage a website. They’ll also understand Search Engine Optimisation, Pay-Per-Click ads and a veritable suite of online marketing skills that will get visitors on your website.
Your business is also probably spending much more than it needs to on administrative processes that could go digital. Take some time to learn about online tools like Asana, Hubspot, Google Drive/GSuite and Zoho, just to name a few.
Your digital model could also reduce the amount of supplies you need, if you think about it creatively. Conduct a thorough analysis of what you’re currently purchasing:
- Can you buy less fuel by giving your sales team more digital skills?
- Will you need less paper and office supplies if your admin process goes digital?
- Will having your back-office team work from home reduce the cost of energy bills?
- Can you modernise any of the products you currently offer to make them digital?
Analyse the Market Demand
Imagine this, you’re a business that sells chocolate bars. The cost of your imports are going up. You get your supplies from abroad, and they’re being hit hard by fuel prices and supply chain issues.
Also, your sales are taking a gentle downward turn. It’s a perilous situation.
Here’s where you have to think about trends.
It’s really important that as a business leader, you’re also a trail blazer. You should be completely immersed in the trends, communities and thought-leadership that surrounds your industry.
What if, hypothetically, you didn’t keep your finger on the pulse and you missed out on the monumental rise in demand for vegan chocolate bars.
Sure, production costs may even be higher, but as a year on year trend, the increase in demand for these ingredients is forcing the price down.
You may even, hypothetically, get a better profit margin on those vegan chocolate bars because demand is so high.
That’s why you need to always be looking out for the next big thing in your industry, and when it’s viable to, take a calculated risk. Investing in the future of your business is the key to future growth, but it’s also the key to survival.
The adaptable survive. That’s the rule.
Pivot Your Offering – Remarket Something That’s Cheaper To Produce
Remember the last recession? Oh boy, how could we ever forget.
In fact, you better not forget, because there were some really valuable lessons to be learned there.
Do you remember the massive boom in white cars? White cars were really cool back then. Luxury car brands were churning them out, and every car in an ad was a gleaming, beautiful white.
The funny thing is, white is a disastrous colour to have your car in. It gets absolutely filthy when you’re driving it on a British road. I’ve certainly learned that lesson.
Paint suppliers knew the demand for white paint was low due to this reason. Consumers just didn’t really ask for white cars, so the price went down.
Then, some clever but somewhat nefarious marketing person (we’re all like that…) decided white cars were in.
Suddenly influencers, footballers and their WAGs were in white cars. The market demand changed significantly. Everyone had a white car.
And the manufacturers won. They could cheapen their manufacturing process, because they were clever with their marketing.
Perhaps, you could do that too?
Well, what do you think? What do businesses need to do to withstand the ongoing rise in costs? Let us know, we’d love to hear from you over on Instagram – we’re at @ntgtraining, or over on our Welsh account @ntgcymru.