Support for businesses

The cost of living crisis and the cost of doing business: supporting you

It’s clear from recent reports from the Office for National Statistics that consumer confidence is low and this is because of the cost of living crisis. Retail sales dropped overall by 0.5% in May, with food spending down by 1.6%.

The impact can be clearly felt by businesses, with online recruitment advertising decreasing in all regions; the largest decrease occurred in London – 6%. Furthermore, 76% of businesses say they have concerns around inflation.

Rents

With the UK now living with Covid and with workers returning to their offices, 66% of those surveyed by the Royal Institution of Chartered Surveyors  felt that office space is still essential for a company to operate successfully. Given that prime office rents in London and the south are expected to edge higher over 2022, any increase in rent will eat into the profitability of local businesses. This in turn will result in many of the businesses passing the cost burden onto the customer.

In addition, 73% of firms surveyed by the British Chambers of Commerce say they are raising prices in response to rising costs.

To support businesses, our friends at the London Business Hub have launched the Property Advice Service to help with finding suitable commercial space, end of lease issues and rent negotiations etc.

If you feel you don’t need a fixed commercial property for your business, you could think about hiring flexible office space for just when you need it. Please see our page commercial space.

Running your commercial fleet efficiently

Petrol and diesel prices are getting higher and higher – see the RAC’s graph above showing latest fuel costs at the forecourt. Running a commercial fleet is a major cost for many businesses, as this affects every part of the supply chain and in most instances now suppliers are passing on these costs.

The RAC have created the Ultimate Guide to saving on fuel. Apart from the way you drive the vehicle itself, there are other ways of saving costs such as better route planning using available apps or mapping systems. Also:

  • Checking for the lowest cost forecourt near you.
  • Consider using company or individual credit cards where there is a linked cash back scheme in place.
  • Think about changing your commercial vehicle to electric alternatives.
  • If you’re a company car driver you may be able to claim tax relief, you can claim tax relief on the money you’ve spent on fuel and electricity for business trips in your company car. If your employer reimburses some of the money, you can claim relief on the difference. To check eligibility click here.
  • Make sure you and other drivers in your organisation are aware of updates to the Highway Code to avoid unnecessary fines, for example, now some councils and TfL have powers to fine drivers up to £160 for veering into cycle lanes. The changes to protect cyclists came into force in January 2022.  Click here to learn more.

Lowering your cost of recruitment

The UK Government increased the Employment Allowance from £4,000 to £5,000 from 6 April to help SMEs.

Employment Allowance is a tax relief which allows eligible businesses and charities to reduce their National Insurance contributions each year. Class 1 savings can be made each time there is a payroll run until £5,000 has been reached or the tax year has ended (whichever is sooner).

The Government estimates that around 50,000 businesses will benefit from the increase.

Click here to check if you are eligible.

Recruitment is not cheap, as there are many factors to consider such as the costs of which job websites to use and weighing up the costs involved. We recommend in these very difficult times, where every penny counts, to use the Councils recruitment service, Our Newham Work.

We would recommend that businesses support residents by signing up to the London Living Wage. Although this not the ideal time to increase your wage bill, we encourage you to look at the benefits such as reduced absenteeism and staff turnover, improved wellbeing both in and outside of work – all of which help productivity.

In July 2022 the Royal Docks launched their action plan to become a living wage place by 2025. Anchor organisations like the University of East London, Tate & Lyle Sugars, London City Airport and London ExCeL are already accredited with the Living Wage Foundation and are actively championing the Royal Docks’ plan to increase uptake by 50% across all industries, enabling a pay rise for more than 3,000 workers. 

Deep dive

Owing to the cost of living crisis, now really is the time to unpick what’s going on in your business so that you can make the necessary hard decisions.

First thing first: monitor your profit margins as this will help you to optimise the most lucrative areas of your business.

In order to do this, look at your gross profit margins. This will help you to review your pricing structure, item by item. Then compare that with your competitors and benchmark your prices accordingly.

Checklist:

Reduce costs

  1. Check your gross profit and net profit margins.
  2. Adjust your offer e.g. if you’re a training provider, you could split a course into individually priced modules.
  3. Negotiate with suppliers and landlords; not just having a discount but changing your payment plan.

Pay attention to the little things

  1. Decide on your must haves against the nice-to-haves.
  2. Shop around for a better deal from banks, insurers and digital providers.
  3. Make sure your product details are up to date.

Gain a perspective

  1. Step back and try and see the bigger picture. To do this, develop your networking circle e.g. find a mentor; join Newham Chamber of Commerce and/or a trade association; speak to your accountant. All this might help you to develop your competitive advantage.
  2. Get feedback and ideas from your colleagues and teams.
  3. If you’re working at over capacity yourself, delegate or train others so that you don’t have to do everything yourself.

Supporting your mindset

  1. Set realistic sales targets.
  2. Lead by example.
  3. Focus on what you can control.
  4. Be willing to try new things i.e. a loyalty programme.
  5. Take action.
  6. Don’t cut corners – quality sells.

Learning and upskilling

  1. Keep learning and growing.
  2. Attend free webinars, read blogs and listen to podcasts.
  3. Continue to network.
  4. Pass on opportunities to your colleagues and teams.
  5. Check www.newham.gov.uk/webinars/training/workshops  pages regularly.

     

Clever marketing
  1. Know which marketing tactics work.
  2. Make sure that you track your marketing and its results.
  3. Go free by using no cost social media channels to keep your presence alive.
  4. Focus on what you do best and don’t over discount.

Support hub

Please find below additional support available to you and your businesses during these challenging times. 

Property support Special offers Debt advice Health and Wellbeing
Energy Funding/loans Recruitment Other support