As the UK heads towards an expected recession, as a business owner you will also be facing the brunt of the lack of consumer confidence.
According to the latest figures from GfK, consumer confidence fell to -41 in June, which is the lowest level on record.
When taking into account the inflationary pressures that consumers are facing, alongside uncontrollable energy bills, this fall is hardly surprising.
You must prepare for the impact of this early on, and plan how to adapt your business plan.
How will this impact your business?
You may already be facing the dilemma of whether to pass on your rising costs to consumers, or whether to take the hit to your profits.
However, this lack of consumer confidence will see consumers reevaluating what they spend their money on, especially if their disposable income has diminished.
So, your business should be prepared for the circumstance that sales fall, or clients start to reduce their services, which could impact your business’s finances.
How can you navigate this?
In this situation, the first step is to look at your current financial position.
Keeping a thorough record of your finances, as well as forecasting, should help to inform your next steps.
If you can do so, consider bringing in discounts on products/services that have a high-profit margin.
Whilst this will dent your finances, it can protect against the complete loss of sales.
However, if you do need to increase prices, you need to make sure that the reasons behind this move are communicated clearly to your consumers.
Another approach to consider taking is to reduce the number of different products or services that you provide.
You should evaluate which of your products/services are the most profitable, as well as whether consumers view them as necessary.
This can guide you on where to allocate resources to shield against low consumer confidence.
Need advice on adapting your business plan? Contact us.
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