How to Adapt and Thrive as a Small Business in a Cost of Living Crisis

Let's face it. The last few years have been tough for small businesses in the UK. We've had to contend with Brexit, the Covid-19 pandemic and now rising inflation. It's no wonder that many of us are feeling the pressure.

However, it's important to remember that tough times don't last forever. There are always ways to adapt and thrive, even in the midst of a cost of living crisis. So, we're sharing our top tips on how to do just that.

Let's get started.

What's going on?

To adapt and thrive, it's important to first understand the situation you're facing.

The cost of living crisis is being caused by rising inflation. This is the rate at which prices for goods and services are increasing.

In July, UK inflation hit a 40-year high of 10.1% [1]. This means that the money people have available to spend on goods and services is being eroded.

The energy crisis [2] is one of the main drivers of this inflation. Energy bills have been increasing at a rapid rate, leaving many people struggling to make ends meet.

What does this mean for small businesses?

Rising inflation can have a big impact on small businesses. This is because you often have to increase your prices to keep up with the rising costs of goods and services. 

However, increasing your prices too much risks putting people off from using your products or services. This is why it's so important to find the right balance.

It's also worth noting that the cost of living crisis can impact consumer confidence. If people are feeling the pinch, they're less likely to spend money on non-essential items. This can greatly impact small businesses that rely on consumer spending.

Here are some figures on how the recent inflation has affected businesses so far:

• In May 2022, 19% of businesses currently trading reported that they were either unable to get the materials, goods, or services they needed from within the UK, or had to change suppliers or find alternative solutions to do so [3].
• One in five (22%) SMB owners now feel more concerned about their business than before [4].
• 49% of all small business owners in the UK were forced to raise prices to deal with cost of living pressures [5].

What can you do about it?

There are a few things you can do to adapt and thrive in the midst of a cost of living crisis. These include:

Expand your customer base

One way to offset the impact of the cost of living crisis is to expand your customer base. There are a number of ways you can do this, from marketing to new demographics or reaching out to new markets. 

Let's say you own a boutique that sells women's clothing. To reach a wider market, you could start selling online or even open a pop-up shop in a different city. In return, you’ll likely reach a larger number of people and boost your sales.

Some tips for expanding your customer base:

• Use social media to reach new audiences: Social media is a great way to reach new audiences. Use platforms like Instagram and Facebook to share your products or services with a wider group of people. You could even use social media advertising to target specific demographics.
• Think outside your local area: Don't just focus on your local area when marketing your business. Think about other cities or even other countries. This will help you to reach a wider range of people.
• Offer discounts and promotions: Offering discounts and promotions are a great way to attract new customers. You could offer a discount on your products or services, or even run a competition. This will help to get people interested in your business and could lead to more.

Conduct market research to identify new markets or demographics: Market research can help you to identify new markets or demographics that you could target. This involves gathering information about a particular group of people and their spending habits. Doing this will help you to understand whether there's a demand for your products or services in a particular area.

Diversify your products and services

Another way to adapt and thrive is to diversify your products and services. Essentially, this means offering a wider range of goods or services to your customers.

For example, if you own a bakery, you could start offering savoury items such as sandwiches and soups. Or, if you own a bar, you could start offering mocktails and non-alcoholic drinks. This will help you to appeal to an audience who may be cutting back on spending.

We recommend the following considerations when diversifying your products or services.

• Consider your target market: When diversifying your products or services, it's important to consider your target market. Think about the needs and wants of your target market and how you can meet them.
• Don't forget your brand identity: When adding new products or services, it's important to ensure they fit your brand identity. You can do this by carrying out focus groups to get your customers perspective. 
• Think outside the box: When diversifying your products or services, it's important to think outside the box. You want your products to be unique and stand out from the competition. This will help you to attract new customers and boost sales.

Adopt technology that drives growth and efficiency

Technology can help you to drive growth and efficiency in your business. This could involve investing in e-commerce software or using a cloud-based POS system. This will help you to streamline your operations and make it easier for customers to purchase your products or services.

Here are some solutions and services we offer at Epos Now that can help you to streamline your business

• GetOnline with Epos Now: Now more than ever, businesses need to move online. With Epos Now's Get Online service, we can help you to set up an e-commerce website or online store. We can also help you to integrate your website with our POS system, making it easy for customers to purchase your products or services.
• Epos Now Payments: With Epos Now Payments, you can accept card payments anywhere, at any time. Plus, defined flat rates, you'll always know how much you're paying, which comes in handy when there's a cost of living crisis.**
• Inventory Management: Keep track of your inventory levels with our Inventory Management system. You’ll avoid stockouts and keep up with your stock levels.
• Accounting Integrations: With Epos Now's Accounting Integration, you can connect your POS system to your accounting software. In turn, you’ll save time and keep up with your finances.

While Technology can help you to drive growth and efficiency, it's important to remember that it's not a cure-all. You still need to have a strong business plan and marketing strategy in place. But, by investing in the right technology, you can give your business the boost it needs to adapt and thrive during a cost of living crisis.

Final Thoughts

So there you have it. Our top tips on how to adapt and thrive during a cost of living crisis. Following these tips can help your business weather the storm and come out stronger on the other side.

Remember, a cost of living crisis can be challenging for businesses. But, by being prepared and making the right decisions, you can help your business to adapt and thrive.