This is the number one question I’m being asked by businesses as they get their head around how much their payroll costs are going to increase next April.
Let’s be clear the cost of these upcoming changes is HUGE because what these changes mean, in round sum figures, is that from April 2025…
A full-time employee (aged 21+) on the NMW is likely to cost around £2,500 more.
A full-time employee (aged under 21) on the NMW is likely to cost around £3,500 more
If you’re worried about how much your business will be affected by these changes then you’re going to find this article super-helpful.
SEVEN STRATEGIES
In this article you’ll discover SEVEN strategies that you can start to implement right now.
I promise each of the 7 strategies will help you make progress because they….
- Are practical & in the main easy to implement
- Won’t cost you much (if any) money to implement
- Will increase your sales, increase your profit and increase your bank balance
Let’s stop thinking about surviving and start thinking about thriving.…
Strategy 1: REDUCE UNNECESSARY COST
With payroll costs rising it is important and sensible to remove any waste and unnecessary cost. By keeping costs lean and cutting out the waste means more cash is kept in the business.
Here are 4 ways for you to reduce the costs in your business: –
- INCREASE EFFICIENCY – use technology and/or AI to automate previously manual processes
- CUT WASTE – stop using services (e.g. IT software) that aren’t needed or being used any more
- PAY LESS – find a cheaper price BUT ONLY if the quality is not reduced
- OFFSHORE / OUSOURCE – delegate tasks to a specialist, AND/OR someone cheaper
Strategy 2: INCREASE PRICES
Even with payroll costs rising by so much I know many business owners will be hesitant in putting up their prices. They’re worried about existing customers leaving and not winning new ones.
Increasing prices can feel scary so possible strategies to help….
- Selective increases – Increase prices for certain customer groups (or certain products/services) to see the results before increasing prices elsewhere.
e.g. start with new customers before existing ones
- Communicate the value of what you do AND in a way the customer understands– So they know they’re getting a lot of value & your price, in comparison, is seen as good value for money.
- Increase the value given – By improving the actual and perceived benefits of what you do will help justify a higher price. As mentioned above, your price is just a fair exchange of value for the value you give – so more value justifies a higher price.
- Create a premium version – Premium products & services will be just what some customers want. By charging a premium price means you will achieve a higher gross profit %.
Strategy 3: MAXIMISE CUSTOMER NUMBERS
The best way to get more new customers is to convert more of the sales leads it already gets into more new customers.
By improving the sales conversation rate a business will win more customers BUT without spending a penny more cash on marketing.
Possible Strategies to Improve Sales Conversion...
- Speed – All sales leads are followed up very quickly – ideally within 10 minutes.
- Nurture campaign – Aims to build a relationship with prospects / sales leads who didn’t convert immediately BUT over time some will eventually say ‘yes’.
- Quotes – Do your quotes clearly communicate your value in such a compelling way that your prospects say ‘yes’. In my experience, most don’t.
Strategy 4: STOP CUSTOMERS LEAVING
By improving customer retention means customers will stay for longer.
The longer they stay the more they will buy and the more profit the business will make.
Possible Strategies to stop customers leaving...
Common strategies revolve around improving the understanding the needs and wants of its’ customers…and then doing better at meeting them. For instance, by: –
- Keep in touch – calling customers from time to time to maintain the relationship and highlight any possible issues which can be quickly sorted and not left to fester.
- Exit survey – ask customers who have left (or will be) why
- Customer survey – ask existing customers how happy they are & how you can do better.
Strategy 5: GET CUSTOMERS TO BUY MORE
You can increase sales and profits by getting their existing customers to buy more often AND / OR buy more every time they do buy.
Possible Strategies to buy more often...
Common strategies revolve around understanding the needs of its’ customers…and then doing better at meeting them. For instance, by: –
- Compelling offer – use offers with deadlines, as this gives customers reasons to come back sooner
- Contacting customers – phone customers and book in earlier return appointments- for example if you are a hairdresser or beautician
Possible Strategies to get customers to buy more every time they buy...
- Add on buys – Where you’re offered something which is complimentary to what you’ve decided to buy. E.g. McDonalds staff ask, ‘would you like fries with that?’
- Trade ups – A strategy often used in coffee shops with the aim of getting you to upgrade your initial purchase. E.g. staff will say ‘just an extra 20p for a large coffee’
- Impulse buys – Many retailers have impulse buy items (often confectionary) near the tills to tempt shoppers (or their children) into adding an extra item into their basket at the last minute
Strategy 6: KNOW YOUR CASH POSITION
Given all the uncertainty it’s more important than ever that you have a cashflow forecast.
A cashflow forecast tells you what your cash position is now, AND what you can expect it to be over the next 13 weeks (or more if you forecast out further).
If you discover, due to your cashflow forecast, that there is a cashflow problem on the horizon then you have time to take corrective action to eliminate or at the very least reduce the impact.
Strategy 7: OPTIMISE THE CASH
To ensure there’s enough cash in the bank, to pay the bills you need to get your customers to pay you on time. In full. Every time.
Cash collection is seen by many as being a difficult and time-consuming task so tends to be left. This is a big mistake. To avoid running out of cash you need to find a way of collecting it.
You can discover 11 practical ideas on cash collection by reading our article in the knowledge centre ‘HOW CAN I GET MY CUSTOMERS TO PAY QUICKER?’.
Every one of the ideas are easy to implement, won’t cost you a penny…..but will get you better results.
SUMMARY
The NMW and Er NIC changes are on the way and, if you’re affected, then you need to take action – without it your costs will rise, and profits will fall.
By considering each of the 7 strategies in isolation makes it so much easier to get clarity on what you could do and helps you decide what is the best way forward and what you’re actually going to do.
If you’d like to have a chat about any of these SEVEN strategies or how we could possibly help you make more profit, then drop us an email to [email protected]
Or call us on 0161 410 0020
Disclaimer
It is important that you take professional advice before making any decisions based on the information that you learnt here. While every effort has been made to make sure it is accurate it cannot be precisely tailored to your personal circumstances. This article is for general information only and no action should be taken, or refrained from, as a result of this information. Professional advice should be taken based on specific circumstances in each individual case. Whilst we endeavour to ensure that the information contained in the article is correct, no liability will be accepted by Krystal Clear Accounting which is a trading name of Kim Marlor Associates Ltd or damages of any kind arising from the contents of this communication, or for any action, inaction or decision taken as a result of using any such information.
