During times of overwhelming economic headwinds, it’s important for business leadership to take proactive measures to prepare their organisations for growing inflation.
From sky-rocketing food and energy prices to unmanageable staff shortages; this current level of economic uncertainty matches that of March 2020.
On the bright side, the similar circumstances over the course of pandemic have at least gifted business owners with hindsight, which offers scope for improvement and control during the country’s current economic struggle.
Here are some tips to help you prepare your business for an unstable economic climate:
Cash is key
One of the most reliable solutions to the current financial squeeze is having a clear understanding of your finances. It is integral to have a good cashflow at this time, as this will ensure that you do not run yourself into any unnecessary debt. It will also provide you with clear insight over how to tweak your spending to ensure your future projections stay in the green.
Understandably, it will not be enough to merely check your future projections once. Even in positive economic times, projections fluctuate regularly and will need monitoring and nurturing accordingly, even in the most optimum of conditions.
Be wary of wage inflation
The recent inflation increase has lead to employers and employees looking at ways in which they can support themselves financially. This includes looking to their employers for financial support, often in the form of pay increases in line with inflation. But in such a volatile economic climate, employers must tread carefully. A wage spiral could prolong inflation therefore, alternative routes should be considered.
There are numerous ways to provide support over the coming months, some of which include:
- One-off bonus schemes
- Tax-free support
- Fuel allowance
- Introducing staff canteens into the office
Focus on staff retention
Many businesses across the UK are grappling with staff shortages reaching all-time highs, plugging skills gaps and battling against the tide of extremely overworked employees. Few things are more catastrophic to businesses than overwhelming shortages of staff, and employers will need to act preventatively in order to lower staff turnover rates.
It is integral (now more than ever) that employers strive to retain their staff. Employees are the foundations of the business and its best asset, and will be the reason your business makes it through the next phase of recovery. Ensure they feel heard and understood by taking into account what they need, while forming compromises along the way. While salary will always come into play, practical benefits and respect from an employer are arguably just as important.
Invest in business insurance
The last thing a business needs in a challenging economy, is preventable financial losses throwing everything out of balance. Ensure your business is prepared to face any hurdles or lulls by covering its most fundamental and vital assets with insurance. Business insurance is essential for tackling financial setbacks and could be responsible for keeping your business afloat during difficult periods.
Unfortunately, there is no way of predicting what comes next, but it is safe to assume that we are not in the clear yet or anytime soon. The best thing employers can do is focus on what they can control and use those things to their advantage.
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