It's no secret that times are tough right now. The current economic climate is impacting everyone, from the individual consumer to the biggest multinationals. SMEs aren't exempt from disruptions to the economy.
For SMEs, these impacts can come in indirect forms (such as customers spending less due to a rising cost of living) through to direct costs (like increases to minimum wage and superannuation Increases). When you add in inflation and the pressure to keep prices low to retain customers, it's fair to say that many SMEs are feeling the pressure more than anyone.
While navigating this current market is tricky, that doesn't mean your business can't thrive. In this blog post, we'll look at ways to maintain revenue and customer satisfaction while navigating the uncertain economic future.
The two big issues facing SMEs
With a tight economy, we're all learning to do more with less. And with 81% of businesses concerned about the risk of going into recession, it's no wonder that many SMEs are playing the conservative game regarding growth and investing in their business. These fears are being exacerbated by uncertainty around two key areas: interest rates and inflation.
A respite in interest rates could be a way to ease pressure on businesses - especially those who have been experiencing rising borrowing costs. Similarly, lower rates can mean easy access to funds for investments and expansions. However, many businesses are hesitant to begin making moves as, while there have been signs of interest rates lowering or remaining steady, experts differ on what will happen next.
Likewise, inflation has been slowly dropping, which has given businesses some respite from soaring costs and encouraging customers to spend their money. However, its journey down has been slower than experts predicted.
The uncertainty around these two key economic factors is an important reminder outlooks and forecasts are never definitive. They're predictions.
After all, earlier this year, there was talk of interest rates being cut. Now, it's possible that they're going to be increased. Likewise, inflation hasn't been dropping at the rate that was predicted. There's simply no clarity around what the future will hold for SMEs, which means they're (understandably) being more risk-averse with their spending and decision-making.
The hesitation and confusion around these two factors are causing a myriad of flow-on effects. Stock is moving slower, clients are late in paying invoices or debts, and there may be fewer new customers. Plus, there's the stress of needing to find additional funds to cover increases in wages and superannuation.
Staying on top in a tough economy
In the current financial environment, you must be on top of every facet of your business. The best way to do this is with data that's accurate and properly reflects the direction your company is headed. Organisations that don't have access to this are making decisions based on old, incomplete, or inaccurate data.
Or even worse, relying on gut feeling.
A full understanding of your business's situation can help you with everyday decisions, such as, whether customers are paying invoices on time, what stock Is moving (and what isn't), and understanding the journey your customers go through before making a purchase.
Even better, with the right data across the entirety of your business, you can also view the bigger picture holistically. This could be essential to your business surviving and thriving. A complete view of your business can assist you in making decisions on raising prices, increasing advertising spend, and offering special deals to attract customers.
Comprehensive data is the secret to success
Achieving a deep understanding of how your business is operating doesn't need to be intimidating. You just need the right tools to give you accurate data and visibility across all aspects of your business. This will help you get smarter about stock, margins, and customer needs in the current economy, and set you up for when things begin to improve.
SAP Business One can be an invaluable resource to you and your business. It has a plethora of helpful tools and features that will help you manage your business operations better and to thrive in this difficult economy.
For example, say that you've sent out an invoice that needs to be paid. With the SAP Business One software, you don't need to manually chase a customer for payment. Instead, the software will automatically notify you a payment is late, and then send a reminder to your customer. The software will continue doing this until the invoice Is paid, freeing up time for you to focus on more important and/or pressing items.
SAP Business One can help in other ways. Imagine that one of your suppliers offers you an improved margin if you achieve a certain level of sales over 12 months. Instead of wasting hours with a spreadsheet trying to figure the numbers out yourself, the software can calculate that for you automatically. It's then up to you whether you want to pass on the Improved margins to the customer or use them to help your business.
And that's just the beginning. From analysing customer trends to maximising how you communicate with your audience, there are so many ways that SAP Business One can assist you in navigating through this tough economic period. To find out more about the software, click here to learn more or contact our team today.
