British enterprises are grappling with a dual challenge of increased expenses and strained household budgets, raising concerns about a potential recession. Although consumer spending remains robust in the economy, many companies have managed to transfer higher costs to customers, alleviating some of the economic strain. Businesses in the UK anticipate a further increase in output prices in the coming year, indicating their efforts to shift rising expenses to consumers while dealing with ongoing financial pressures. In the first quarter of 2022, commercial electricity bills saw an approximate 30% year-on-year increase. These events are triggered by the energy crisis, the inability of the Energy Bills Discount Scheme to make the cut in the minds of the citizens and supply chain issues that continue to exist.
Rising inflation affects both households and business owners, potentially leading to increased costs for materials and labour as well as supply chain disruptions and staff shortages. This impact can be exacerbated for businesses engaged in international trade, as higher UK inflation can erode their competitiveness by making their products or services relatively more expensive compared to foreign alternatives.
Here’s what businesses have done to cope with this situation
Cost cutting
In order to combat such situations, businesses usually manage cash flow in a more aggressive way. This would naturally come from pre-engaging with stakeholders belonging outside of your company, like your suppliers and your clients about your plans. In order to combat fuel poverty, businesses have been diverting their attention to more cost-cutting equipment on their shopfloors. People also explore the options of cutting down on their workforce, but there area businesses who cannot function with an arrangement like that. The next option is for them.
Consider shifting
Businesses need to rethink their priorities. Depending on the business model, for some, shifting to a place demanding lower rent is more affordable than losing out on the workforce. To escape the high costs of London, numerous businesses are shifting to various regions across the UK. Birmingham, for instance, has strategically positioned itself as a centre for technological innovation. Recently, booking.com also opened its headquarters in Manchester, with a capacity of 1300 people, with 450 people already hired.
Be more flexible towards your staff
2020 was a hallmark year for getting work done in virtual modes. With efficient methods like timesheets, worksheets, etc., even small businesses can regulate work out of their distant employees adequately well.
Adapting is a key ingredient of a successful entrepreneur. Small businesses have come up with creative ways to hold on to their client-base, like being in touch with them on a personal level, substituting energy-efficient ways of working, etc. Entrepreneurship in UK is set not only to grow and prosper in innovative ways but also to give brilliant economic outlook on rising out of inflation.
