Why businesses have welcomed the challenge of disruption caused by the current economic downturn
The cost-of-living crisis has left businesses in all sectors reeling, and with the economy in a state of flux, what can firms do to stay afloat in this environment? Is it even possible for businesses to thrive in such a climate, and prepare themselves for a time of greater prosperity when this turbulent period finally eases?
It’s undoubtedly a tough time, but the most ambitious and successful businesses welcome such challenges. With the right approach and a confident outlook, there is every chance for organisations to continue to grow despite the difficulties they face.
The impact of the cost-of-living crisis
The COVID pandemic now seems like many moons ago and while organisations are just recovering from its impact, another major problem has hit, leaving many organisations in another vulnerable position. With no end in sight, business leaders have had to adapt to this turmoil and respond accordingly. Research shows that 72% of business owners are concerned that the current cost-of-living crisis is going to affect their company in some way, while 23% of leaders even predict that their business may not survive the financial year if prices continue to soar.
So what can organisations do?
Cost reduction is imperative
According to BDO's survey of 500 medium-sized businesses, energy costs, inflation and disruptions to supply chains have been a major concern. Because 60% of organisations were only prepared for a 6% rate increase for the entire fiscal year, many companies were forced to raise prices to boost margins, and a fifth had to halt their investment plans. The Bank of England predicts inflation will fall this year, but it will still be a while before we are out of the woods.
To avoid prohibitively high labour costs, firms must now expand their revenue streams and embrace automation where possible, in order to cut costs while resources are expensive and profit margins are low. Organisations that can continue offering attractive value propositions to customers during a time when they have little money to spend, while trimming the fat off their behind-the-scenes processes, will survive economic fluctuations best.
Businesses must also remain diligent in the face of an increase in targeted cyberattacks while firms are financially weakened. Cybercrime cost UK businesses an average of £4,200 each in 2021; for medium and large businesses, this number rose to £19,400, representing a further expense that businesses cannot afford to incur.
With this in mind, it is more important than ever that businesses get their houses in order as far as cybersecurity is concerned. This should be a holistic process, as opposed to haphazardly adopting security solutions to plug gaps on a reactive basis. Leaders must spend time building their strategy and ensuring any software they implement is seamlessly integrated into this. Having a watertight business continuity plan is essential in making sure all the bases are covered.
What lies beyond?
Business growth and survival are undeniably threatened by times of disruption, especially given the unprecedented difficulties faced by businesses in recent years. However, these challenges provide the ideal breeding ground for innovation, accelerating the pace at which everyday business practices evolve. No one knows for sure when the economy will be in a healthy state once again, but companies that embrace the challenge, manage their expenditure well, improve efficiency and prioritise cybersecurity are the ones that will prosper.