With the COVID-19 outbreak, UK high streets are faced with a very uncertain future. Reducing your costs will help put safety nets in place, giving you time to regroup and plan for the months ahead.
All businesses, whether they’re currently trading or not, now need to re-examine their costs to ensure survival and reduce risk.
Cutting costs, changing the nature of costs, and being able to better manage increased costs within cash flow constraints may be daunting, but making these changes will allow businesses to keep going during this difficult period.
Understanding cost structures will make it easier for future planning:
- Direct costs are related to generating revenues
- Indirect costs are related to running a business
- Variable costs can vary directly with sales
- Fixed costs don’t change with sales volume
As demand drops off, direct and variable costs will likely reduce correspondingly or should be managed down. This could include new stock orders being postponed or cancelled, or staff being furloughed, put on to zero-hours contracts, or let go.
Businesses should also review and, wherever possible, reduce their indirect and fixed costs. This can be achieved through better procurement, price negotiations, improved productivity, reduced wastage, to name a few.
There are numerous partners you should consider re-negotiating terms with including your landlord (rent) to suppliers (product), professional services (accountants etc) and more.
Every local high street business owner should develop their own plan for saving money and managing costs across their products and services, premises, people, and other expenses.
There are dozens of different ideas to consider in relation to this goal alone, including everything from re-evaluating your stock and suppliers to organising your inventory and supplies, getting the best deals on your utilities to looking after your team, and more.
In addition to reducing your business costs, the other goals that we encourage all high street businesses to work on are:
- Selling through multiple channels
- Marketing during lockdown
- Collaborating as a high street
- Preparing for the future
- Funding your business
Here at SaveTheHighStreet.org, we are now running 12-week COVID-19 support programmes for local high street business owners, working closely with each business to develop and implement a highly personalised plan that considers every possible idea across all 6 goals listed above.
This is our most hands-on support programme ever and aims to give as many local businesses as possible the best chance of success on the high street, for now and for the future.