As we are all too aware, the current trend is for higher monetary inflation and you can find many theories on what is driving the increase. If you couple this with input inflation, or the rise in price of materials and energy that you are purchasing, then this could be another tricky period for SMEs.
Any persisting bad news about how consumers have less to spend or that the cost of living is biting into household budgets, has a direct impact on customer confidence and spending, which in turn becomes another barrier to success. Businesses need to cope with this, along with the problems of higher inflation.
The pressures placed on SMEs to increase employee salaries, to help them with the increase in prices, coupled with input prices has, in turn, caused businesses to make changes to protect themselves.
Some have reported that, in order to maintain prices, some of their suppliers’ service levels have worsened but, dependant on your market place, there is a split on how to handle the current issues. Education and Non-Profit companies are reducing the size of their workforces whilst others, for example Professional and Media & Technology, are absorbing costs to remain competitive.
Those companies that have a loyal fan base and have focused on service and quality, have been able to put in moderate increases in the price of their products and services, in order to curb rising costs.
A recent Client 360 survey held by Lloyds Bank found the following useful data
82% of the 1472 SME leaders who took part, stated that the cost of living increases were having a negative impact on their businesses
61% said that inflationary pressure had caused their supplier service to worsen
53% confirmed that they have had to increase the price of their products and services
So, whatever market your business works within, you are not alone – although it can feel like it – and taking action now, to improve quality and service, will allow for price increases that can mitigate the worst of the effects and allow you to build for the future.
Creatively Yours Ltd helps businesses like yours succeed online through website design, website development, and our Helponomics system that offers support and training as you need it and highlights areas that could increase your sales.