How to deal with inflation as a small business
2021 was a momentous year for small businesses in the UK. They consistently adapted to the volatile business environment in order to grow and flourish. However, with concern still existing around Covid and the growing threat of inflation, small businesses are facing several factors which they must combat in order to make 2022 another fruitful year.
Rising inflation, as predicted by the Bank of England, combined with the threat of rising interest rates this year, has resulted in small business owners citing 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 business 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 are increased and inflation rises, 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.
First, businesses must invest in technology to become as technologically savvy as possible. By doing this, businesses can maximise their customer base whilst keeping their overheads under control. Utilising technology in your small business can differentiate you from your competitors, help you gain more business and provide you with easier work solutions.
The next step that businesses must consider is buying inventory, property and equipment early in the year. Buying the core materials that your business needs early will reduce the negative impact of anticipated costs rising later in the year. It 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.
The final step that small business owners must consider is to arrange long-term agreements with suppliers. Arranging longer-term agreements will help businesses understand their cash requirements by giving them more control over their significant fixed costs over the next few years, allowing 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 they 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.
At IW Capital we are always searching for, and looking to invest in, small businesses in their growth journey to provide them with the opportunity to thrive and succeed. To find out how IW Capital could maximise your investment opportunities, please contact the team today on 020 7015 2250, or email firstname.lastname@example.org.