How digital tech could help you manage cost increases in your sector

Businesses of all sizes and sectors across the South West are having to cope with eye-watering cost increases, and nowhere is this more evident than in the agriculture sector. 

As reported by the BBC in March, farmers are facing “crippling increases” in essential fertiliser and fuel costs, following global oil price rises fuelled by the war in the Middle East. Previously, farm diesel was selling for 65p a litre, but now farmers are paying up to £1.30 a litre. Fertiliser prices, too, have reportedly almost doubled.

 
Rising costs are also putting intense pressure on the UK food and hospitality sector, with significant increases in energy prices, ingredients, food, drink, employee wages and business rates (for many). It’s a similar story for UK retailers, with weaker consumer spending providing a double-whammy, while in March The Guardian reported that UK manufacturers had been hit by the sharpest month-on-month increase in cost inflation since Black Wednesday in 1992.

UK businesses have been battling painful cost increases for some years now, although it’s become much worse of late. Sadly, digital technology cannot prevent cost inflation, but it can enable your business to better manage the problem.

Being able to know exactly where, when and how much your costs are increasing is vital, of course. Providing it’s updated regularly with accurate figures, cloud-based accounting software provides real-time visibility of your costs. Obviously, rising costs may soon lead you to seek better value from existing or new suppliers.

Cash is king, of course. Run out of it at your peril. Thankfully, accounting software makes it much quicker and easier to produce real-time cash-flow forecasts, which could help you avoid nasty surprises caused by spiralling costs, as well as enabling you to make better-informed business and investment decisions. Recording every penny your business spends is simpler with good accounting software. Costs can be automatically accounted for and receipts snapped and stored in the cloud, so you can keep a close eye on your outgoings and claim all your allowable tax expenses.

Automation is one of the most powerful cost-saving aspects of digital technology. By making repetitive tasks effortless it can free up you and your people to get on with higher value work. Common automation examples include generating regular invoices and payment reminders, customer service responses, payroll, social media posts and inventory management. 

Harnessing the full power of automation can be transformative. As well as speeding up processes and offering savings on labour costs, it can reduce errors, which can also prove expensive. 

Your data could also help reduce your costs significantly. Sales data can reveal products or services that drain your resources, while providing low margins. CRM (customer relationship management) software data could indicate where you’re wasting money trying to sell to leads that never convert. Data can also reveal where money is being wasted in your processes, supply chains or staffing.

Website analytics can show where you’re wasting money on content or social media. And, whether ads, search, social media or email campaigns, web analytics can tell you which channels work, so you can save vital cash on marketing activity that doesn’t. If you’re spending heavily on ads that generate traffic but no sales, you can reallocate that budget or simply save the money.

 
Affordable AI tools now help SMEs conveniently analyse data, predict trends and save cash by optimising their operations. Moreover, AI-assisted financial forecasting enables more accurate budgeting, so that SMEs can avoid spending more than they can afford. And AI-enabled digital procurement tools can streamline purchasing and enable SMEs to cut costs by finding better deals.

For retail and service-based SMEs, selling online or selling more online can reduce customer acquisition costs significantly, greatly extending reach without the need for expensive physical expansion. Obviously, selling online involves far lower costs. You can also gain from automated order processing and customer communication, while better targeted digital advertising can reduce marketing spend. Even businesses that rely on in-person services can enjoy the cost-saving benefits of online booking systems, customer portals and digital marketing.

As many SMEs have already discovered post-pandemic, where possible, remote working can reduce your operational expenses. The shift to hybrid and remote working can reduce physical overheads, made possible by cloud collaboration tools and other digital technology that enables you and your people to work from any location. They can also enable you to minimise face-to-face customer or client meetings, which can take up lots of your valuable time and money.

Used to its full potential, digital technology gives UK SMEs unrivalled power to better understand and manage their costs. Against a backdrop of punishing cost hikes and uncertainty over when it will end, digital technology remains the anchor that could help UK SMEs steady the ship, weather the storm and sail towards calmer waters.

Tech Adoption for Growth is a new, government-funded pilot programme offering free, practical digital support to help SMEs and sole traders in the South West get more value from digital tools. Eligible businesses are assessed and then randomly allocated to receive either one-to-one expert support or take part in expert-led workshops. Apply now.