Small businesses must also manage the cost of living crisis

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The cost of living crisis will affect millions of homes, but small businesses will also suffer.

It’s everywhere we look: on newsletters, on social media, on business pages.

Inflation in the UK is at its highest in over 40 years, when it was in double digits. I remember the effect it had on our businesses. You had to keep running just to stay still.

Inflation eats away at the value of money like nothing else and I think the Bank of England has been complacent in allowing this completely predictable situation to occur.

Many business owners have never experienced high inflation. Have no illusions. Inflation is a scourge for everyone. And it comes at a time when energy costs are rising at a rate not seen in decades.

Companies are not required to automatically grant cost-of-living wage increases to their employees. The best way to pay people is on results, which encourages increased productivity, great service, and automatically trickles down to profitability.

This in turn allows the company to pay all employees a numbers-based profit share, while you should always increase the pay of individual star performers who are essential to the company.

This is, in my opinion, a much more sustainable model in times of inflation.

We are also in the midst of a period where many employees are looking to change jobs and where companies should look at the overall benefits for their employees.

Health care support, including employment assistance programs, is a way to help your employees deal with any mental or personal issues they may be facing. Providing private health coverage is another option. If they leave the company, they obviously lose that major benefit, so it’s a retention tool.

Some companies also have a perks program where people can get discounts on gym memberships, cafes, restaurants, and vacations. All of these additional improvements help to retain employees. It’s important at the end of the year to list all the benefits to make sure your staff knows what great company they work for.

There has never been a more important time to focus on staff retention, with three-quarters of UK workers looking to leave their jobs this year. Retaining staff saves you money in the long run, in areas such as recruitment, onboarding and training programs.

It certainly sounds like business owners might have some tough decisions to make. It’s important to have a conversation with your employees and explain the situation so it’s clear to them where they stand.

With energy costs soaring and wholesale prices quadrupling in the past year alone, it’s important for energy-intensive businesses to cut costs wherever they can. There are a few simple steps that can be taken to reduce energy consumption – making it a standard policy to turn off all electrical equipment at the end of the day and when not in use is a great place to start and can significantly reduce costs with little to no effort.

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