What steps can small businesses take to deal with inflation?
2021 was a momentous year for small businesses in the UK, as they consistently changed and adapted to the volatile business environment to continue to grow and flourish. As we enter 2022 however, with concern still existing around Covid and the recent Omicron variant, small businesses are facing several factors which they must combat in order to make 2022 another fruitful year.
With rising inflation predicted by the Bank of England, combined with the threat of rising interest rates this year small business owners have cited inflation as their biggest concern in 2022. A recent study showed that nearly three quarters of small business owners (71%) thought that inflation was the biggest concern facing their businesses throughout 2022.
In the long-term, the UK inflation rate is projected to trend around 3.3% in 2022. Whilst it may be a turbulent year if interest rates and inflation are raised, there are critical steps that small businesses and their owners can take in order to navigate their businesses through 2022’s ever-changing business environment, as well as turning the year into another positive one.
Luke Davis, CEO of IW Capital discusses:
“This past year was certainly a momentous year in the world of investing. As we head into 2022, the main concern for small business owners is the rising cost of inflation. Whilst it is a valid concern, there are steps which small businesses can take to deal with it and set up their businesses with the best chance to thrive in 2022.
“First, businesses must invest in technology, small businesses must become as technologically savvy as possible. By doing this it will allow their business to maximise their customer base as well as keeping their overhead under control. By utilising technology in your small business, it can differentiate you from your competitors, gaining more business as well as providing easier work solutions.
“The next step that businesses must consider is buying inventory, property and equipment early in the year. By buying the core materials that your business needs early, it takes away some of the negative impact of anticipated costs rising later in the year and also provides your business with extra stock needed to continue operations if another unforeseen event (such as another Covid variant) were to emerge and impact the business sector.
“A final step which small business owners must consider is agreeing long-term agreements with suppliers. By agreeing longer-term agreements, it will help businesses understand their cash requirements by giving them more control on their significant fixed costs over the next few years, causing them to budget easier and manage their cash.
“Small businesses in the UK have flourished over the past year and, by taking the necessary steps, I have no doubt will continue to flourish throughout 2022. Small businesses have constantly adapted to the ever-changing business environment and they seem ready to take on any challenge in order to continue to progress and develop their business.”