……… President & Chief Executive Officer at KYOCERA Document Solutions (UK)
The cost-of-living crisis that followed Covid-19 has left businesses in all sectors reeling, and now that the economy is in a state of instability and uncertainty, what can firms do to stay afloat in this new business environment? Is it even possible that businesses could thrive in this economic environment, preparing themselves for a time of prosperity when this turbulent period finally eases?
The impact of the Covid-19
Covid-19 caused much of the world’s operations to halt for months at a time in early 2020, with its effects lingering for the next 18 months in some form or another. According to the Cornwall Council study, 92% of the 546 respondents saw an immediate and significant impact on their businesses as a result of the outbreak. Cash flow is cut by an average of 75% and sales and bookings are reduced by 86%.
Businesses had to adapt by moving into the online era: updating their websites, offering delivery for certain services, being active on social media pages, and communicating with their customers. As much as Covid-19 affected businesses, it also affected consumers, with many now expecting these services, resulting in the companies with the foresight to adapt during the pandemic being in a better position going forward. In this current period of the ongoing crisis, those who survived this pandemic improved their operating models, and this will also pay dividends in the future.
Amid a cost-of-living crisis, cost reduction is imperative
According to a Times report from June, the cost-of-living crisis could worsen the impact of the pandemic for businesses. According to BDO’s survey of 500 medium-sized businesses, energy costs, inflation, and disruptions to supply chains have been a major concern for them, and the Bank of England has even predicted a 10% rise in inflation. Because 60% of businesses were only prepared for a 6% rate increase for the entire fiscal year, many businesses were forced to raise prices to boost margins, and a fifth had to halt their investment plans.
To avoid unnecessarily high labour costs, firms must now expand their revenue streams and automate their production methods to cut costs while resources are expensive and profit margins are low. Vendors who can make their products attractive value propositions for customers during a time when they have little money to spend, along with trimming the fat off their behind-the-scenes processes, will survive economic fluctuations best. Businesses must also remain diligent in the face of an increase in targeted cyber-attacks while firms are financially weakened. Cyber crime cost UK businesses an average of £4,200 in 2021, for just medium and large businesses, this number rose to £19,400 – a further expense that businesses cannot afford to incur.
2023 and beyond
Business growth and survival are undeniably threatened by disruption, especially at the unprecedented level experienced by businesses in recent years. However, these challenges require adaptation, accelerating the pace at which everyday business practices evolve. As the economic slump eases, companies that constantly strive to manage costs and improve efficiency will prosper.