After two years locked up and down, the world is feeling a little more normal again, with borders opening, live events returning and people travelling and eating out. While we are starting to head in the right direction, businesses are being hit with hurdle after hurdle and not all are able to withstand these challenges.
For small businesses, it is particularly difficult as talent shortages continue and COVID-induced closures impact their revenue. Now faced with record inflation, it is time for business owners to put a plan in place to help ensure they continue to operate viably and come out of what is a challenging period for companies of all sizes.
Inflation in Australia is sitting at 5.1 per cent – the highest the nation has seen since 2001. Meanwhile, wage growth is only 2.4 per cent. This means consumer spending may take a hit and we have already seen the cost of goods continue to rise.
These rising costs mean businesses in hospitality and retail are forced to mark up the cost of the goods they sell or face taking a cut from their revenue, just as they were starting to get back on track. To limit the negative impact and save money, there are a few strategies I would recommend business owners consider.
1. Rethink your product and service offering
It may sound obvious but reevaluating what you’re selling to customers can often be the best first step to beating inflation. Analyse customer purchases to see what is selling and what isn’t. Rejig your offering accordingly.
If there is something that isn’t selling well or the items needed to create the product have become too expensive, think about reducing or removing from your offering. Price increases are inevitable for the moment, so if you do keep the item on the menu or reorder stock, make sure it is worth it. Be transparent with customers and make sure they understand why prices have gone up – your loyal customers will appreciate this.
2. Focus on staff preservation
Every time a business has to recruit a new person, it costs them more than it would to retain staff. The latest figures from the HR Industry Benchmark Survey show the cost to hire has more than doubled over the last year, sitting at $23,860 per candidate, up from $10,500 the previous year. Create a culture and environment that will keep employees loyal to the business. This doesn’t always have to be higher pay, but often a safe space to work and somewhere where they feel they can achieve their goals.
Start by listening. Hear what it is that they love or hate about their job and then work on a plan to make it a place they want to come to every day. The employee experience is directly linked to the customer experience. Happy and loyal employees will be the greatest brand ambassadors for the business.
3. Invest in an all-in-one tech stack
Technology and digital transformation have done wonders for improving business efficiencies. Integrating technology systems can help reduce costs and people hours – something that has become increasingly important with the ongoing staffing shortages.
As time has gone on, it is likely businesses have found themselves working with numerous vendors and the costs can add up. Look for solutions that offer you the best value and where possible – if it is right for the business needs – opt for an all-in-one solution. This will help save money and offer a more seamless user experience for both staff and customers.