Three ways SMEs are innovating to survive the cost of living crisis
It’s a tough financial market right now for entrepreneurs. Find out how three are tweaking their businesses to survive the cost of living crisis.
The cost of living crisis has hit us all hard, but small and medium-sized enterprises (SMEs) have been disproportionately impacted, with as many as 61% grappling with surging energy costs, and 47% facing the mounting expenses of materials.
Here are how three small business owners who sell on Amazon are innovating in order to navigate through this challenging time.
1) How Freda Health are saving on costs by increasing corporate orders
Founded by Affi Parvizi-Wayne, Freda Health sell award-winning natural and organic period and bladder care products. Although their sales are still steadily growing on Amazon, they noticed a dip on their own website sales and the cost-of-living crisis has resulted in higher costs.
The company has seen an increase in the price of packaging, materials and delivery for the brand, but also heightened demand for donations as women across the UK have been struggling with period poverty.
Despite overall costs having gone up by 27%, they are absorbing as much as possible rather than passing it all on to the consumer. This means getting creative and making internal changes, including pivoting their strategy to target more corporate customers to help reduce the cost for consumers.
This has enabled them to move towards selling items in bulk, which saves on postage and packaging while also shrinking the carbon footprint for the business and consumers. A win-win for everyone!
2) How the Funky Soap Shop created new opportunities by selling white label products to hotels
Anni Kriesche, founder of the Funky Soap Shop, has faced a rollercoaster year due to the Ukraine war, supply chain issues and cost of living increases. The combined impact put unprecedented pressure on her business, and for the first time she feared for the survival of the business she had worked so hard to build up over the past decade.
Not only did the Funky Soap Shop see raw materials such as olive oil double in price, their customers were also being more cautious with their spending in the early months when things were quite uncertain. There were weeks where Anni couldn’t pay staff wages. She felt devastated and responsible, and her health was impacted by the stress of it all.
Resilience and support from family helped Anni push through and she focused her attention on being resourceful and exploring new opportunities such as offering white label products to hotels and hospitality venues looking to cut back on single use plastic, developing gifting options, and using Fulfilment by Amazon to maximise overseas sales in the US and Canada.
Sales have started to pick up since Christmas 2022, and the Funky Soap Shop will soon launch its gifting options on Amazon. Although still tough, Anni hopes to be on an upward trajectory now.
3) How Roni B’s Kitchen is keeping customers happy by only raising prices proportionally on the raw ingredients
Roni B’s Kitchen is a Filipino sauce business run by Roni Badong, and in the last couple of years, she’s seen the cost of rapeseed oil, an essential ingredient, rise by a staggering 300%.
Roni was stuck between a rock and a hard place. She was determined not to sacrifice the quality of her products, and she knows that people are more willing to support small producers who use natural and quality ingredients.
So, despite the cost challenges, she refused to compromise on the great flavour that her sauces were known for by using cheaper ingredients.
However, with budget-conscious customers, she also couldn’t afford to raise her prices significantly. The answer for Roni was, rather than a blanket increase across her range of products, to only increase prices proportionally to the raw ingredients.
Roni’s resourcefulness shines through, whether it’s making shrewd business decisions or finding money-saving hacks in the kitchen. Her mantra is simple: “When faced with tough situations, think creatively and outside the box.” She has also leveraged Amazon’s advertising support to get more eyeballs on her products.
How can you innovate to stay afloat in these tough times?
The cost of living crisis is hard on us all, and it doesn’t look like it’s going away any time soon. So, if you too are an entrepreneur, how can you innovate to help your business not just survive these tough time, but even thrive through them?
Photo by Ben Garratt