5 ways to adapt to the cost of living crisis
Five practical ways that small business owners are responding to the impact of rising production costs and cost of living increases on their businesses, customers and clients.
The cost of living is rising for small business owners and their customers and clients alike, with factors such as inflation and higher production costs contributing to that rise.
RFi research from the Australian SME Banking Council suggests that cash flow and business demand form the number one challenge for 25% of small business owners, and that economic and supply chain concerns are the number one challenge for 22% of small business owners.*
Rising costs can increase pressure on the buying habits of customers and clients, and on the cash flow of small businesses, affecting both demand generation and a business’s bottom line.
Here are five tips from small business owners showing how they are adapting to the rising cost of living, strengthening their business’s cash flow, and supporting their customers and clients in the process.
Supplier management
“We are holding higher levels of stock … to achieve lower bulk pricing with suppliers.”
“Freight costs have dramatically increased,” he says. “We’ve absorbed some of these increases to keep our delivery costs affordable for customers, but we’ve had to increase our prices on some products to remain profitable.”
Tom identifies three main techniques he is using to alleviate the impact of these rising costs from suppliers.
“We are holding higher levels of stock of certain light fittings to achieve lower bulk pricing,” he says. “We’ve also reached out and directly negotiated lower prices with some suppliers.
“We are also working with suppliers to ship products that we don’t need to hold at our store directly from their warehouses to our customers to avoid doubling up on freight costs.”
Task automation
“We have implemented software solutions to automate mundane tasks.”
“We have implemented a custom software solution to automate mundane tasks such as inventory management, order processing and financial management,” he says. “This not only saves time for our staff but also reduces the need to hire additional personnel.
“This approach allows us to keep our operating costs low and pass the savings onto our customers.”
New product options
“We’ve made the conscious decision to introduce a number of new, low-cost products.”
“We’ve made the conscious decision to introduce a number of new, low-cost products,” says Aida Rejzovic, owner and founder of Sassy Organics. “These are still certified organic but are not as expensive as some of the higher-end brands that we stock at the moment.”
“Aggressive” digital marketing
“We’ve invested in various digital marketing strategies … to reach a wider audience.”
“One of the key techniques we’ve implemented is aggressive digital marketing,” he says. “With the rise of social media and online advertising, we’ve had to stay on top of our game to ensure our brand gets noticed.
“We’ve invested in various digital marketing strategies, such as search engine optimisation, email marketing and social media advertising, to reach a wider audience and get our brand in front of potential customers.
“We’ve also focused on providing a top-notch website experience for our customers.”
Customer empowerment
“We give customers the ability to choose the stones for their jewellery pieces.”
Cullen Jewellery’s business model, for example, is focused on providing affordable purchasing options to its customers.
“We give customers the ability to choose the stones for their jewellery pieces, allowing them complete control over the price and the flexibility to tailor their purchase to their budget,” says Jordan.
*RFi Australia SME Banking Council, November 2022
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