Navigating business growth in a cost of living crisis: strategies for success
Revenue is the lifeblood of any business, but when consumer spending power is low, businesses can rapidly feel the effects.
And with the cost of living crisis, record inflation, rising energy costs, and more all coming together all at once, the outlook is tricky for entrepreneurs.
I’ve been brand-building in blue chip consumer goods businesses and leading smaller-scale SMEs to multi-million-pound turnover for a decade and a half now, including the Phil Smith Be Gorgeous haircare range launched right at the end of 2007, which grew from £1.5 million to £5 million turnover in Sainsbury’s in 3 years.
Experiencing both ends of the business spectrum during turbulent economic times has taught me a lot. As I look to scale my new company Bullet & Bone during a similarly tricky period, I think back to those times and what I wish I had heard back then.
Bullet & Bone is a premium skincare brand designed to enhance sports and fitness performance. Launched in 2019, months before the pandemic, we’ve built and benefited from several factors, both within and out of our control, that give our predominantly B2C business resilience going forwards, and which I want to share with anyone running or looking to start a business like mine.
Product strategy is key and one that naturally leads to loyalty has to be the focus for every consumer goods business looking to build resilience. Every product is a solution and making that solution effective and all-encompassing will be met with loyalty, advocation, and crucial repeat purchases.
Every product in the Bullet & Bone range serves a specific purpose before, during, and after exercise, and we clearly communicate our use of 100% natural ingredients backed by good science. This has resulted in a great repeat purchase rate, recurring revenues, and stability from which to grow.
Getting to know your customers is the best starting point. Since entrepreneurs tend to solve problems close to home, start with yourself and what you would look for beyond a few hero products and use that first-hand insight when opening dialogue and conversations with your community.
Endorsements and validation
We’ve backed our product strategy with endorsements, which are key to building trust, and the power of social proof shouldn't be underestimated.
People are looking for reassurance that what they are buying is good quality and, at a time when every purchase is scrutinised, worth spending money on.
I’m grateful to have this from high-profile figures, including celebrities and elite international sports teams and athletes, but this can come from your everyday customer. Getting as many good reviews and testimonials from every customer will go a very long way and the more recent the review, the better, so keep on top of this continually.
Route to market
E-commerce is likely to form part of your route to market. It has never been easier to set up an e-commerce website, nor has it been cheaper to run one. This high-margin channel will unlock access to new customers in new territories easily, provide lots of tangible data, and make it as simple as possible for customers to make purchases from wherever they are.
According to Squarespace research, it’s an unavoidable part of business today and going forwards:
- Fifty-seven percent believe that a well-designed online store or website is more important for a business to have than a brick-and-mortar location
- Seventy-six percent of Millennials and 64% of Gen Zers, specifically, always look up a business' website (e.g. a restaurant, store, etc.) before shopping, visiting or eating there, compared to 65% of Gen X and 49% of Baby Boomers
- Seven in 10 agree that when a local business has a well-designed website, they’re more likely to shop there in person
As part of the latest Bullet & Bone investment round, we are investing in the website to make user journeys as friction-free as possible. It’s one of our main routes to market, our highest-margin and highest-performing channel so investing in improvement is a priority. And with a pipeline of new products planned, collecting, owning, and understanding key metrics produced by the data from your website will help you when speaking to investors, new customers and partners, and support your decision-making on marketing and future product development.
If you can get in with high-end distributors and retailers, this part of your route to market can be safeguarded to an extent as well. These large businesses have significantly more resources, which they will deploy to safeguard their business and keep the traffic up, which you, in turn, then benefit from. However, they will pay closer attention to your performance as well so anything you can do to positively influence this will prolong your time with them. It also gives you an endorsement from a reputable retailer, which will provide just as much validation as a well-known public individual.
Growing your business
While it is easy to focus solely on survival in the short term, crises are only temporary. And by our very nature, entrepreneurs are always thinking of growth so don’t let uncertain times affect that.
While customers are carefully considering every penny spent, you must do the same. Before growing your business, ensure growth is from a stable platform by looking at every operating expense, any operational efficiencies you can make, and consider your supply chain. All of our products are made here in the UK, so we cut out expensive shipping and import costs and put it towards improved margins. You can go further by sourcing from local suppliers where possible to lower transportation costs and your carbon footprint.
If you have good long-term growth prospects, consider raising finance through a loan or equity investment. Having financial resources behind you can give you breathing space to think and plan ahead, the ability to invest in marketing, advertising, and more to grow revenue, and well-connected investors can often open doors for you. One avenue we’ve chosen is equity crowdfunding through Seedrs, which lets us complete our round, drive awareness, and test the market, all at the same time.
In my 15 years of experience in the personal care industry, segments like health, well-being, and personal goods such as cosmetics or perfumes maintain a good degree of resilience.
An example of how a big multinational has achieved this is Dove's Real Beauty campaign launched in 2004, which they’ve stood by ever since, bringing it up to date through various iterations through the years. A success because it touches on every consumer's need to feel beautiful and also taps into our desire to feel better about ourselves. In times of uncertainty those little lifts count for a lot so consider the impact you are having on your customers’ emotional state in your communications.
As we begin to see the light at the end of the tunnel, it’s essential to consider the long-term changes to consumer behaviour forged by this challenging time and how you align within that. And above all else, recognise your own changing mindsets and behaviours as an entrepreneur whose business has survived and thrived in tricky circumstances, and embrace the good practices that helped you achieve that.