At first glance, the current economic climate is far from conducive to commercial growth. After all, inflation soared to an oppressive 3% in October, while stagnant real wage growth has also squeezed household finances and reduced consumer spending.
Businesses have suffered adversely as a result of this, while many are also struggling with the rising cost of imports as the value of the pound continues to depreciate. These factors have had a cumulative impact in the minds of entrepreneurs, who are increasingly inclined to adopt a negative outlook and prioritise survival over growth.
This can prove to be counter-intuitive, however, and in fact you may be better served by driving growth and expansion even as the economy struggles. Here's how to achieve financial growth and retain a competitive edge as consumer spending falls:
1. Consider low-cost Growth Strategies
If you're going to expand successfully in a challenging climate and as consumer spending is squeezed, you'll need to seek out creative and low-cost growth opportunities. This means that even if your turnover stagnates or experiences a slight decline, it's possible to boost profitability and grow financially.
We can see a recent success story here, as the WH Ireland brand strived to expand their venture by creating a strong presence in the North of England. This not enabled the company to offer its wealth management services to a larger audience, but it also helped them to reduce operational costs by targeting more affordable regions.
This strategy makes it possible to optimise turnover while also reducing costs, creating higher margins and the type of growth that defies economic portents.
2. Adapt Your Pricing
Pricing is arguably the most challenging aspect of running a business, as you must strive to cover your costs while also creating price points that the market can bear.
This can be even harder in a strained economy, where consumers have less to spend and are more selective about how they invest their money.
If you take a proactive approach and strive to adapt your pricing strategically, you can still grow financially as the economy stalls. This is particularly true if you're able to successfully reduce costs without compromising on your value proposition, and create flexible promotions which encourage customers to make purchases.
3. Identify New Customer Segments
Consumer behaviour is changeable, particularly in the digital age. Although this can be confusing for businesses, it also creates opportunities for entrepreneurs that have a clear understanding of their products, ranges and their core value proposition.
This enables them to effectively target new and potentially more affluent customer segments, even as other demographics reduce their spending. The Millennial demographic is set to become increasingly dominant as its youngest members begin to reach adulthood, for example, so targeting this group can be highly beneficial.
The key is to effectively identify new and viable demographics, and target these as a way of optimising turnover and negating a dip in consumer spending.