Entrepreneurs are under constant pressure to cut costs while growing their companies. But lately, it has become increasingly challenging for businesses to maintain their competitiveness due to reasons such as inflation and the rise in raw material and supply shortages. Many business owners are still determining how to survive the effects of inflation despite their best efforts, making preparation for an inflationary period all the more crucial.
As a consequence of inflation, companies are forced to increase the prices of products to make up for the costs. However, when inflation rises, consumers’ purchasing power erodes. As a result, businesses are likely to record lower sales, reducing their total revenue.
In Singapore alone, core inflation reached a 13-year high in 2022. Thus, if you are an entrepreneur struggling to keep your business afloat amid inflation, read on to discover some of the most effective ways to keep your business cost low during inflation;
1. Keep track of your expenses
Identifying an increase in your business cost begins with recognising just how much it has increased over time – essentially, you cannot fix something you do not know. To keep your business cost to a minimum, it would be best to track your spending and put a halt to those expenses that are not that necessary to your business operations. Moreover, it would help if you receive updates on your industry’s supply and demand to determine if inflationary pressures can be waited out.
2. Borrow money now
Taking out loans amidst inflation when the value of money is dropping may seem counterintuitive at first. However, it can actually be a wise move. Interest rates typically increase in the event of a recession as money lenders tend to compensate for the dropping value of money with higher repayment in the future. As such, it would be wise to take out an easy loan in Singapore to cover your business’ additional expenses now before the rates become higher.
3. Enter into long–term supply contracts
Overcoming the challenges of inflation can begin early with the long-term planning of contracts. Getting involved in a long-term supply contract may be in the form of advanced purchase orders with fixed monthly quantities at fixed prices. Ultimately, ensuring that your supply of increasingly priced raw materials is steady will likely be the saver in the total cost of your products.
4. Maximise the remote work setup
When the COVID-19 pandemic first hit, many businesses were forced to adopt work-from-home arrangements. Over time, people have grown accustomed to this setup. This is not surprising since the remote work setup has proven to be more productive for larger teams with busy schedules. Moreover, it saves a lot of money for businesses, as it cuts petrol costs, reduces electricity expenses, and eliminates office rentals. Hence, if the remote work setup works for your business, then you should definitely take advantage of its benefits.
Inflation can have different effects on different businesses. Although some companies may be interested in riding through inflation until it steadies, you can overcome its impact early by keeping the cost of your business low throughout the inflation period. Tracking your expenses, taking out a loan in advance, entering into long-term supply contracts, and taking advantage of the work-from-home setup are some of the best ways to go about doing this.
For the most reliable financial assistance to help meet your business’ increasing needs, Orange Credit is the money lender you can trust! We offer a variety of flexible and valuable loans with fast loan approval in Singapore that can surely help you sort out the problems your business is currently facing due to inflation. Feel free to contact us today to learn more about our loans.