The living costs crisis will hit millions of homes, but small businesses will suffer too.
It is everywhere we look: on news bulletins, on social media, in the business pages.
Inflation in the UK is running at the highest rate for more than 40 years, at which time it was in double digit figures. I remember the effect it had on our businesses. You had to keep running just to stand still.
Inflation eats at the value of money like nothing else and I think the Bank of England has been complacent in allowing this entirely foreseeable situation to arise.
Many business owners have never known high inflation. Do not be under any illusions. Inflation is a scourge on everyone. And this comes at a time when energy costs are increasing at a rate not seen in decades.
Businesses are under no obligation to give automatic cost of living wage increases to their employees. The best way to pay people is on results, which encourages increased productivity, great service and which automatically flows through to the bottom line in profitability.
That in turn allows the business to pay all employees a profit share based on the numbers, while you should always increase the pay of individual star performers who are key to the business.
This, in my view, is a much more sustainable model in inflationary times.
We are also right in the middle of a period when many employees are looking to change jobs and businesses should look at the overall benefit packages for their people.
Healthcare support including Employment Assistance Programmes is one way to help your employees with any mental or personal issues they may be facing. Providing private health cover is another option. If they leave the company, they obviously lose this major benefit, so it acts as a retention tool.
Some companies also have a benefits programme where people can get discounts on gym memberships, cafés, restaurants, and holidays. All these extra enhancements help to retain employees. It is important at the year end to list the full benefit packages to ensure your staff know what a super company they are working for.
There has never been a more important time to focus on staff retention, with a reported three-quarters of UK workers looking to leave their jobs this year. Retaining staff saves you money in the long run, in areas such as recruitment, induction and training programmes.
It certainly seems as if business owners could have some tough decisions ahead. It is important to have a conversation with your employees and explain the situation so they are crystal clear on where they stand.
With energy costs soaring and wholesale prices having quadrupled in the past year alone, it is important for high energy using businesses to save cost wherever they can. There are some simple steps that can be taken to lower energy consumption – making it standard policy to switch off all electric equipment at the end of the day and when not in use, is a great place to start and can drastically reduce costs with little to no effort.
