Should I Cut Costs Or Increase My Prices?
With more than 85% of SMEs expecting a lower profit in the next nine months, the more prepared you can be for the unexpected, the better. Managing expenses is a good idea at any stage in your business and you may need to consider increasing your prices.
Smart Ways To Get Your Costs Under Control
Cashflow has been a big issue for thousands of businesses this year, and when the money’s not rolling in, it can help to rethink your costs. To do it effectively involves more than just keeping an eye on outgoings. It’s about looking at all the moving parts of your business to see if your systems (or lack of) are costing you unnecessarily. Here’s how:
Muck in - Do a cost control audit to work out where your big cost centres are and look at your systems for managing them.
Be aware - Don’t just slash your expenses. Track costs and look out for opportunities to trim fat or take a different approach.
Unite your team - Bring everyone together to monitor and analyse inputs and expenses. Reviewing and developing your systems? Get your team’s feedback.
Look to your peers - How do your costs compare to others? If a business of a similar size and production system to you is performing well, but spending less, explore what they’re doing differently.
Seek advice - Got a good idea of where the issues are, or feeling totally confused? Talk to your advisors about your next steps
How Can I Put My Prices Up Without Losing Customers?
If you need to change your pricing to make ends meet, be honest and upfront with your customers at all communication points.
Make it clear on your website and social media that prices have changed and why.
Send an email to let all your clients and suppliers know about the changes.
Meeting people face-to-face? Make sure they’re aware of the price hikes before they’re invoiced - otherwise you could be in breach of the Fair Trading Act.
Provide the best customer experience you can by updating staff on any changes and advising them on how to communicate them to customers.
Worried you’ll lose fans? Consider staggering price increases of individual products over time.