Whenever inflation creeps upwards, businesses and consumers alike are compelled to take action or else feel the pain of rising costs putting strain on their finances.
Tools which can analyze data and highlight cost-cutting insights are invaluable in this situation, so how are they being used by small businesses in particular to make savings right now?
Anticipating exposure levels
The key to coping with inflation is knowing the extent to which your business is exposed and responding accordingly. You don’t want to overdo it with amped up price rises if this isn’t necessary because of the niche you occupy. Likewise, you don’t want to ignore the looming specter of inflation, only to find that it hits your bottom line in unexpected ways.
Data analytics tools allow even small businesses to predict just how much they’ll be exposed to the after-effects of steep increases to inflation, taking into account everything from material costs to overseas exchange rates.
With these insights in hand, organizations can pick and choose from which strategies they adopt, and shape decisions they make as the state of play evolves with time.
Identifying waste
Wasteful practices are a drain on any business, and the latest data analytics tools can pinpoint inefficiencies and allow for savings to be made without compromising any area of a firm’s operations.
For example, looking at expenses and finding that the current communications solutions being used are either over-provisioned for the size of the organization, or tied into other excess costs that aren’t delivering good value, is possible. From here, you can then justify switching to a modern business phone system for small business which is cost-effective, flexible and future-proof.
Embracing dynamic pricing
The pricing of products and services is often the first thing to be influenced by rising inflation, and this is a way for businesses to ease the pressure and deal with volatile market conditions across the supply chain.
Analytics comes into play when determining how to handle price increases without frustrating customers and losing market share in the process. By checking up on sales data from the past and assessing buyer behavior, you can determine which lines can bear the brunt of an increase, and which might fare better if they are left unchanged for the time being.
It’s a balancing act, for sure, but one which is far less perilous when the latest tools are brought to bear on the mountain of information that you have at your disposal.
Controlling spending
Small businesses need to make informed decisions when it comes to any major expense, and this is more important in the current climate than it has been for some time.
It’s of course possible to take on debt to deal with inflation and justify spending, with a view to recouping costs through increased sales in the future. However, being overstretched right now is not the best idea, and so smaller companies have to be confident in any choices they make.
Data analytics tools allow businesses to choose how to handle investments from a strong position of confidence and understanding. It’s less of a gamble if you know that making a particular purchase of equipment or materials now will deliver returns within an acceptable time frame. The same goes for staffing costs; drilling down into the data suggests whether new hires will help or hinder your financial situation over a given period.
Ultimately the decision might be to rein in spending and make cutbacks, rather than going ahead. So long as data is the driving force, rather than guesswork or unfounded intuition, any decision is easier to green-light.
Embracing automation
Automation is one of the most impactful cost-cutting options that businesses have at their disposal, but the trick is to know where it makes sense to use it, and where sticking to manual methods will be better.
In a time of rising inflation, this is especially pertinent, because organizations need to weigh up the costs of adopting and implementing automated solutions against those of retaining existing practices and processes using flesh and blood employees.
Likewise, you may find that things like sales automation actually allow you to wring more value out of your existing resources, giving team members more time to focus on higher level tasks.
Final thoughts
Small businesses need to find a way to stay afloat while the storm of inflation increases rages. Stability is sure to return eventually, it’s just a case of holding tight until it does and minimizing the damage in the interim.
Data analytics tools are the best bet that companies have and are increasingly instrumental across the business world. The best organizations will use them not only to ensure their own survival, but also to reduce the burden that’s placed on their customers.