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Adapting business through a cost of living crisis

DATE: 20/12/22


Over the past 24 months, the economy has endured a host of ‘once in a generation’ events. From Brexit to a global pandemic, the war in Ukraine to a rate of inflation not seen for more than 40 years. It’s hard to imagine tougher conditions for businesses. The reality of a cost of living crisis could feel overwhelming for a newly launching or scaling business. There are however some steps to be taken to help businesses adapt and even thrive in this economic environment.

With rising inflation and a staggering spike in energy prices, the cost of goods and services has steadily risen over recent months and looks set to continue at least in the short term. A first response from business would sensibly be to increase their own prices and to continue to do so to match the financial conditions they are experiencing. This is reasonable and will be tolerated up to a point but most business owners understands this continued rise is unsustainable. Consumer confidence dips as prices increase and if costs rise too much, consumers will simply stop purchasing.

Recognising this price ceiling, businesses should be encouraged to look more creatively at what they can do to recession-proof their organisations and find a clear path ahead without losing customers or profit along the way.

Add more strings to your bow

Maximising your revenue streams is a good place to start. Perhaps you sell a single product or offer a range of products to your customer base? Why not talk to them and find out what else they need or want? Do some market research. Can you identify a new service or product that remains in-keeping with your brand mission but offers your customers something extra?

Think outside the box, review your competition and the market as a whole and see what needs exist that are not being met. Since COVID, some local businesses may have closed down. Can you identify products or services that no longer exist for your local customer base? Gaps in the market that you could fill? The more products or services you offer, the more revenue streams you have open, the more robust your business plan can be.

Consider your customers base

Take a detailed look into your customer base. Could you consider targeting a similar customer base but in a different area?  Could you identify a broader customer group in your local area to target? Use Social media to market to your new demographics. Make the most of Google Analytics and free social media tools to see how your customer base is responding. Use your findings to fine-tune your efforts.

Expanding your customer base might mean setting up to sell online if you do not already offer that. With a limitless geographic boundary, you open yourself up to a far larger customer base and the opportunity to optimise any marketing campaigns you already have in place.

Lean on technology 

Making your business more efficient by using relevant technology can not only reduce your overheads (particularly in Human Resources) but can also offer you protection and adaptability. It can provide productivity wins in how you engage with customers, how you manage your products and services and how you scale your business.

Considering a stock control tool gives you certainty around your holdings, reduces the employee time involved in manual checks and makes for a seamless management between in-person and online sales.

Investing in a small business accounting programme would open up the possibility of  point of sale services, administration of your tax accounts and management of pay roll. It reduces your reliance on manual financial management, removes or reduces human error and streamlines your supplier and customer accounts.

These days technology exists to streamline a huge number of everyday business functions. Rather than embarking on everything at once, choose one programme that can make a real difference to how your business is run and optimise it. Once you have mastered one piece of technology and understand what benefits it offers your business, you’ll be better placed to take on something else. Over-investing in technology that you cannot and do not use negates any potential benefit.

Think about your staff

The cost of living crisis effects everyone. It’s vital with that you take time to prioritise your team. Check how they are feeling, and how they are managing the challenges. Make sure you are paying them fairly and regularly and wherever possible, promote and increase pay to maintain happy and confident employees.

The cost to recruit a staff member is often more than the cost of retaining so focus your attentions on making sure your team feel valued and secure in their roles.

Consider whether you can offer hybrid working. Offering flexibility in working location reduces employee churn, lowers your overheads and has been shown to maximise productivity and budget.

Be a budget master 

Knowing your budget in detail becomes even more important in times of economic challenge. Take time to look into every line item in your budget. What are your fixed overheads? What dos your pay roll look like? Do you understand the components of your supply chains, third party contracts and anything else that impacts your bottom line? There will undoubtedly be areas in which you can make savings. It’s always useful to fine a space to rethink how you use the finances available to you.

Perhaps you can reduce your office space and instead rely on hot-desking options while your team move between working from home and in the office. Maybe you can connect with another like minded business to share physical space? That way you can cut overheads but still offer your employees comfortable and inspiring work space.

When you’re looking at third party contracts, consider what you could bring in house to reduce your outgoings. Do you have a staff member that could take on social media management? Perhaps you use a drop shipping service, could you consider bringing that back in house instead? Be strict. Small savings each month can add up to a big difference to your bottom line.

Launching or growing a business has its challenges at the best of times. During a cost of living crisis, there are even more pressures to manage. Set in place some measures to protect yourself and grow your business as you approach the upcoming quarter.


Whatever your business idea, we’d love to help. Read some of our Go For It Success Stories and get in touch. Our business experts will be delighted to hear from you and to talk you through everything you might need to know to move forward with your business concept.