6 tips to tackle rising costs in your family business

Even with the inflationary economic climate calming down, base interest rates remain relatively high and many businesses are experiencing rising costs. Cue the Budget 2024 and further costs pressures are set to come in 2025.

Against the backdrop of the continuing cost of living crisis and slow growth in the UK economy, financial pressures continue, making it difficult when pricing your products and services to maintain profitability. Customers expect value for money and competitive pricing, so the balance is key to any family business.

This is a challenge that can put additional pressure on your business’s bottom line profitability and cash flow, but careful management and planning can help to ease some of the pressure.

6 tips to tackle rising costs

1. Maintain close relationships with your suppliers and take full advantage of any special offers available to obtain the lowest unit cost. Negotiate favourable payment terms wherever possible.
2. Seek alternative quotes where necessary to ensure your suppliers remain competitive. Shop around for the best deals on your utilities, telephone and broadband bills.
3. If your business has substantial borrowings, consider whether you have any refinancing options available to manage rising interest costs.
4. Review the individual margins on all products and services you provide. If certain products are not profitable then consider either repricing or removing them from your offering.
5. Make sure you are doing all you can to minimise wastage to keep your margins as healthy as possible.
6. Regularly review your stock levels to ensure you are carrying the correct amounts of each product. Carrying too much stock ties up cash unnecessarily but carrying too little can lead to loss of potential earnings and dissatisfied customers.

In order to weather the ever evolving economic climate and in anticipation of any further cost rises, it is wise to conserve cash where possible.

However - and often sadly as a result of some businesses having been forced to sell up after a turbulent few years - despite higher than modern historic interest rates and further HMRC burdens, there are still opportunities for those looking to expand, with new locations to buy or lease available on favourable terms.

Similarly, if your product and brand are strong, and you have a detailed vision of what you would like to achieve, the cost landscape is one particular threat that can be navigated with great planning and sticking to strategic goals.