Businesses need to be conscious of rising costs as they carry out their growth plans.
Striking a balance between investment and prudent business remains crucial for business leaders in a constrained economic environment.
While many are used to the challenge – it has been over five years since the start of the credit crunch – balance in spending and cost reduction is rarely straightforward.
Lean too far one way or the other and the company may find its position weakened. Just as spending too much may build up unsustainable debts, investing too little may concede a competitive advantage to rival firms.
Business leaders need to use all their skill and experience to decide on an appropriate strategy for growth, one which consolidates their market position without building up unnecessary risk for the future.
But with the Office for National Statistics reporting above target-level CPI inflation again in March, it seems costs will continue to increase for businesses – and this fact cannot be ignored.
The indications are that inflation levels could hit three per cent in the coming months, meaning firms will get less for their money, and will be under pressure to increase revenue or further cut costs.
Inflation is just one of many factors which need to be considered as businesses look to balance the books – others include consumer demand, market activity and current sales.
But rising costs are a concern, and perhaps reason to consider ways of keeping expenditure under control.
Simple steps such as the more effective use of technology and more productive working practices, may be able to increase efficiencies, offsetting the impact of rising costs.
Posted by Steve Williams
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