Have the confidence to increase your prices

Despite the near-catastrophic impact that the lockdowns had on our tourism, hospitality and events industries, the reality is that many businesses in other sectors did quite well over the COVID-19 period. This survival was due to record government stimulus, cost relief for some (like commercial rents), and strong demand.

The June quarter results for the Business SA William Buck Survey of Business Expectations show a reduced confidence level in the business community. However, this is not a surprise as the stimulus is gone, and any cost-relief has well and truly ended.

What concerns me about the results of this survey is over a third of businesses say they won’t even pass on 10 per cent of their increased costs. If they see increased costs themselves through materials and overheads, then they must have the confidence to raise their prices to keep their margins strong. Right now, it is challenging to simply ‘do more work’ to keep the profits up, with worker shortages and restricted material supply presenting such significant challenges.

Finding workers is a ubiquitous challenge globally. Keeping your existing staff engaged in your operations is far more cost and time effective. From the survey, more than 50 per cent of businesses said they were concerned about the impact of wage increases on the viability of their business. What is worrying about this is that now is precisely the time to consider a wage rise as an investment in your staff rather than a cost to your business. This may challenge smaller business operators who do not have access to the range of resources that larger businesses do. Perhaps they are technically savvy but need to truly invest in leadership training to value their staff.

In challenging times, businesses need to understand their business model, reflect on where they have been, and set realistic and stretch targets for where they want to go next. This forward-thinking will make your business more appealing to potential new staff and is an excellent way to keep your existing team engaged.

To read the full report, please click here.

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By Jamie McKeough, Chair and Managing Director

Jamie is the Managing Director in South Australia and Chair of the William Buck Board of Directors. Jamie provides business and financial management, tax and accounting advice to clients across many different industries. His key strengths are in problem solving and understanding business models and the key drivers of business.

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