Businesses were faced with a turbulent time last year in light of Brexit; however, with 2018 set to bring greater cost pressures, the truth is that many business journeys will not be smooth-sailing for the year ahead either. The reality of Britain’s situation will hopefully come into clearer focus during this new year, but currently, nobody knows what the true cost of doing business outside of the EU will be. Many predict it will be a difficult, costly and reactive process; however, much the case with many unpredictable events in business, the best advice to follow is to manage your controllable costs, whilst making sure there are contingency plans for every eventuality in the future. In the following feature, we investigate areas where businesses can take control of their expenditure to ensure they are not adversely affected by the uncertain times ahead.
Consider Local Sourcing and Cost-Effective Suppliers
If there are changes in the trade deals, will this have a huge impact on how you source your materials, products or services? For many organisations, the answer is most likely yes. With new import charges and taxes inevitable (at a rate still yet to be determined), it may be beneficial to look into local sources within the UK to offer a level of certainty to your business costs.
If there is no possibility of obtaining these resources locally, it may be time to review your suppliers. The trap that many businesses fall into is sticking with one supplier because of the hassle associated with moving to an alternative supplier; however, this can often result in organisations missing out on substantial savings and better services that could be waiting for them with a different company. Additionally, without a regular review of the costs of your suppliers, you could be paying an unnecessary and invalidated higher rate for the products and services. By reviewing and strengthening the relationships with your existing suppliers, there is a big chance of negotiating better terms for the future.
Factor in Wage Rises
In the coming year, rises in wages will be experienced across a wealth of sectors as the national minimum wage increases in April 2018. Although, not substantial on an individual basis, this increase could come as a shock to organisations who are only just beginning to deal with higher inflation rates and the fluctuating value of the pound. Reports by the Bank of England also indicate that pay growth is set to accelerate this year due to scarcity of new employees; this problem will see employers agreeing to settlement packages that are around 2.5% to 3.5% higher than the previous year.
Smart employers will be the ones that take the new year as a time to review their employee schemes and compensations to minimise future costs but encourage staff retention and loyalty. Staff will expect more from their employers, with salaries, benefits, flexibility and autonomy that reflects their talents; it is, therefore, crucial that businesses look at the staffing structure to avoid any disruptions to operations.
Make Sure Your Business is Flexible
As aforementioned, ensuring your business adopts a forward-thinking approach to expenditure can help to alleviate some of the uncertainties associated with the year ahead. However, also ensuring your business is flexible and ready to adapt will help to limit any unforeseeable damage. Despite the focus on the negatives that Brexit is likely to bring, there is also the possibility for substantial opportunities. Use this time to assess the operations and processes of your business- from the manufacturing and suppliers to staffing and operations. A comprehensive review will ensure your business is lean, profitable and ready to scale up or down quickly should the business require it. Making sure your company is operating more efficiently and cost-effectively now will allow you to be in a better position to adapt to any increased costs or negative outcomes in the future. Should you need help with your reviews, consider hiring a professional consultancy team who are removed from the status quo; they will be able to identify areas for optimising your business and find huge cost savings that will help your business to operate more efficiently.
Whilst nothing has changed as of yet, the Brexit clock is ticking. UK businesses are still able to make use of the privileges of our EU membership, but this won’t be for much longer! Now is the time to ensure your business is healthy, managed efficiently and prepared to maximise the opportunities and minimise the damages caused by this event. Get in touch with our consultancy experts at Expense Reduction Analysts today to discover the areas that we can help your business streamline its operations and still obtain substantial savings.