What goes up, keeps going up.
This week on mind your own business I want to talk about increasing costs. At the moment it feels like an assault from every single direction. You’ve got wage costs going up which has been exacerbated by a recruitment shortage. You’ve got material costs going up and that’s been exacerbated by supply chain issues. You’ve got shipping costs going up you’ve got rent going up at some point we’re going to have interest rates increasing over the next six to 12 months I think.
So what are you doing about it well I’ve got four tips for you to help you navigate this challenging time over the months and weeks to come. First up is make sure that you’ve got proper visibility and reporting in place. Now hopefully you’ve got really good quality management information hopefully you’ve got proper reporting in place so that you understand exactly what’s going on with your costs and which areas it’s affected in which areas it might not be. If you don’t shame on you get that sorted out because as soon as you see impacts on margins you want to jump in and respond.
Tip number two is pass it on you’re probably going to have to pass on these costs and especially so if you have low margins or negative margins. Now do it in a sensible way sit down with your customers explain to them what’s going on get your management team together and come up with a proper plan on how to do this in the most efficient way and most effectively. Next up is make sure you can deliver make sure that you have stock on the shelf people to deliver if you’re a service business monitor capacity and monitor your throughput when a customer picks up the phone or sends you an email or sends in an order you want to be able to fulfil that order even if that means it’s a little bit more expensive than it was last time.
Finally make sure that you are all over your sales process. Manage every single inquiry make sure that the sales team are all over the conversion rate KPI’s make sure that they are monitoring the number of leads coming into the company if you can win new business at higher rates that obviously takes the pressure off of all of the other existing business. So those are my tips make sure that you take the time to put a proper plan together across those four points and implement it as quickly as you can so that you can maintain margins and have a really good 2022.
See you next time on mind your own business
If you’re looking for more small business tips, then we’d like to see you every week on “Mind Your Own Business,”
Marco Soares is an award-winning business coach in Sussex and is available if you’d like help implementing these tactics.