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Tag: small business

Impact of rising living costs on SMEs

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SME business owners are going through it this year. 

They’ve been hit with various economic factors fueled by the pandemic and the ongoing conflict between Russia and Ukraine. This is leaving a steady trail of small businesses closing down as the pressures they face become insurmountable. 

So exactly what pressures are businesses facing and how can they stay afloat throughout a storm that appears to have no end in sight? We’ve pulled together a few tips for SMEs:

 

Rise of living costs:

Inflation is forecasted to peak at 13% in Q4 2022 and was at its highest rate since 1982 this July at 10.1% [1]. The soar in living costs has various impacts on SMEs:

  • Decrease in consumption, especially of non-essential products/services 
  • Raises in price of products/services heightens competition possibly leading to lowered customer retention 
  • Overhead expenses to be cut eg. lowered budgets for marketing etc
  • Pressure for increasing employee salaries 

SMEs will need to internally audit and re-calculate their operations and budgets to tackle this. You’d be surprised how many unexpected costs could be cut down with simple solutions. An example of this is telecommunications costs. 

Many businesses still operate their customer support via traditional landline phone systems requiring contracts with carriers. As these contracts come to an end and with inflation at an all-time high, SMEs are faced with big telecommunications bills for the coming years. To cut down on these costs, switching to a VoIP phone system like Devyce will be beneficial.

Devyce is a hybrid phone system that provides two numbers on your phone. This means businesses won’t need to invest in physical landlines or providing handsets to employees while still operating with a reliable phone system. 

 

Energy crisis:

The price cap of energy costs is set to increase to 80% in October 2022 resulting in an increase of roughly £1600 per year for “typical” consumption levels of energy per household [2]. What does this mean for SMEs?

  • Providers are removing lower cost tariffs 
  • Pressure to reduce essential costs to accommodate which have negative long term effects 
  • Closures of physical locations 

Ways to overcome the spike in energy costs is to invest in sustainability and adopt greener practices. For example, with an abundance of reliable communications tools available such as Devyce, many businesses could look into adopting remote working models to cut down on use of office space. This saves businesses money, reduces impact on the environment due to reduced commuting of employees and use of energy at offices. 

For more sustainable solutions that could save your business on massive energy costs, check out our blog post:

Five unexpected ways businesses can be more sustainable 

Supply chain issues:

The supply chain problem is a cycle of poor management of logistics both internally and externally for businesses. The challenges with supply chain logistics are partly due to less staff resulting from the pandemic and is expected to continue into 2023 [3].

 

This has resulted in:

  • 79% of SMEs facing increased prices from suppliers over the past 6 months [4]
  • Major delays in exporting of goods leading to long wait times for customers to receive goods, affecting customer experience
  • Exacerbation of inflation leading to increased competition between businesses

What SMEs could do to minimise the effect is firstly to internally audit their processes eg. stock intake and maintenance etc. By optimising these processes, SMEs can mitigate the supply chain challenge by ensuring they can plan well for stock replenishment. Business owners could also look into working with more local suppliers which are more likely to be able to deliver with minimal disruptions. 

The past couple of years have undoubtedly been tough on small businesses. The differences between businesses that are able to continue trading and those that are forced to close are flexible businesses making necessary adaptations to face the piling challenges. Make a smart business decision and find out more about how Devyce could help you cut costs and tackle these challenges here:

References:

[1] https://commonslibrary.parliament.uk/research-briefings/cbp-9428/

[2] https://commonslibrary.parliament.uk/research-briefings/cbp-9491/#:~:text=The%20energy%20price%20cap%20increased,consumption%20paid%20by%20direct%20debit.

[3] https://www.resilinc.com/in-the-news/supply-chain-delays-will-spread-well-into-2022-and-possibly-2023/#:~:text=Supply%20Chain%20Delays%20Will%20Spread%20Well%20Into%202022%20and%20Possibly%202023,-Sep%2002%2C%202021&text=According%20to%20an%20analysis%20by,the%20overstrain%20in%20transportation%20systems.

[4]https://startups.co.uk/news/supply-chain-inflation-uk-smes/

The Most Important Things Start-Ups Should Invest in Early

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When starting a business, you’ll undoubtedly have a million things to do, whether it be product development or fundraising. So, what do business owners need to prioritise for maximal growth? Truth is, there isn’t one area that should be prioritised more than another. This means it can get difficult to manage if internal processes aren’t optimised. 

 

Around 20% of businesses are dissolved in the first year according to research carried out by Fundsquire [1]. The reasons for startup failure could be one of many including: getting outcompeted, hiring the wrong people or burnout. 

To help better manage your business and avoid startup failure, owners should look to invest early into these things:

 

  1. Scalable Tech Solutions 

Whether it be long processes like data logging or physical equipment like work phones, there are almost definitely tech alternatives available that will make your life easier as a business owner. 

An example is Devyce – a modern business phone system.We provide you with two numbers on your phone through an app so you can affordably make business calls without having to commit to a lengthy contract with a phone provider. 

Devyce also offers a Teams Plan to provide your employees with business numbers and you have access to a Teams Management Portal where you can view call analytics and manage employee inbound/outbound calls. The Teams plan is scalable to your business needs and growth so it will save you money in the long run, allowing you to allocate more budgets to other departments such as Marketing. 

 

Check out our Teams Plan for your business here: 

 

  1. Marketing

So, getting Devyce has saved you a lot of money on the telecommunications side. Now what do you invest in? Marketing! 

Many businesses underrate the importance of marketing, especially in the early stages. An important component of marketing is customer relationship management. While many businesses’ marketing efforts are directed towards top of the funnel objectives and getting those sales, the actual relationship a business has with its customers is widely neglected. 

It can get difficult to stay on top of all your customers’ journeys without a system to collate all the information. To ensure you foster and maintain beneficial relationships with your customers, business owners should look to utilise CRM platforms like Hubspot. This will encourage more positive reviews to be generated for your business, further helping as 90% of consumers rely on reviews when making a purchase decision [2].  

You can also integrate your CRM system with Devyce to keep track of your client calls and the follow up! 

 

  1. Your Team

The people you choose to work with can be the make-or-break factor for your business. It’s important that you take the time to hire the right people to deliver on your long-term business goals. Not only will you need to hire the right people, but you will also need to invest time into their development as your business grows. 

However, the pandemic has changed the way we work, and many businesses need to hire remotely. This has many advantages for business owners including saving money due to lack of need for office space. Although, it can be challenging as business owners will need to find ways to seamlessly integrate new hires into the company from afar. 

Here’s how Devyce can help; our plans are easy to sign up to and within minutes you can assign business numbers to your employees. With Devyce your employees can work from anywhere in the world and the app is easily accessible on any smartphone – just download it from your app store! 

 

Find out how else your business can benefit from switching to Devyce here.

References:

[1] https://fundsquire.co.uk/startup-statistics/

[2] https://www.qualtrics.com/blog/online-review-stats/

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