The last month, especially, has highlighted the challenges that many businesses face when it comes to supplies and costs.
The idea of people filling up plastic bottles with petrol, or trolleys with a mountain of toilet rolls, may seem bizarre but they have become a stark reality in the last year and a shortage of some supplies is affecting businesses.
Companies already face a number of issues as they work to get back up to speed following the COVID-19 lockdowns. A shortage of supplies and skilled labour is another challenge that may thwart growth and risk their viability.
While we still face potential disruptions from the pandemic, the main issue at this time seems to be a lack of deliveries due to issues with supply and a nationwide shortage of HGV drivers. This is true whether we are talking about fuel, or food.
To make matters worse, rising energy prices and growing inflation are the latest additions to what appears to be a growing list of concerns for businesses.
In an attempt to fix part of the problem, the Government has plans for temporary visas for 5,000 foreign lorry drivers but the British Chamber of Commerce (BCC) has described this measure as ‘a thimble of water to put out a bonfire.’
Last month more than a million vacancies were reported. The good news for many workers was that wages are rising, but the downside is that it creates inflationary pressures which in turn affect prices.
The current crisis all amounts to rising costs for businesses, which must adapt to changing and, in some cases, unfamiliar conditions. Given this new period of uncertainty businesses should:
- Know how they will respond to future fuel shortages if this would impact their activity
- Assess their gas and electricity prices and seek out better tariffs where possible
- Implement a strategy for attracting and retaining key workers, if not already
- Seek out new and reliable suppliers where necessary
- Outsource business functions to reduce costs and reliance on certain skills
- Consider how rising supplier costs will affect end product prices and underlying profits and investments.
For example, prolonged fuel shortages could be alleviated by turning to electric, particularly if you have a fleet of vehicles.
Why act now?
Crisis planning may seem like something that can be kicked down the road but eventually, that road runs out, by which point it is too late to act.
While many larger firms have contingency plans in place, for many small businesses they can be seen as an unnecessary additional cost. However, regularly reviewing the costs within your business and creating a crisis strategy are both essential steps in building greater resilience.
To talk to our team of chartered accountants, business and tax advisers, in Bedfordshire, Cambridgeshire and Hertfordshire, about how we can support you to manage business costs more effectively and to put strategies in place to see you through future crises, contact us today.