How to manage rising business costs (when personal expenses are soaring also)

How to manage rising business costs (when personal expenses are soaring also)

Successfully running a small business involves keeping a tight rein on costs. But when soaring inflation and rising interest rates are driving expenses higher, it’s important to look at the full picture.

Three consecutive interest rate hikes since May have put pressure on business and personal finances. Trivia buffs may be interested to know we haven’t seen a similar string of rate rises since early 2010 [1]. But it’s no trivial matter because the Reserve Bank has warned of more rate hikes to come [2].

Juggling rising costs

For Australia’s 2.5 million small business owners [3], rising interest rates deliver a double whammy – not only raising the cost of business borrowings, but also leaving owners facing higher home loan repayments.

Moreover, rate hikes are going hand-in-hand with inflation of 5.1% [4], pushing business costs higher.

It adds up to a challenging time for small businesses. No wonder six out of ten business owners say they feel stressed [5].

Time to work through a solution

Rather than wear higher rates and rising costs, business owners can take action to release the pressure valve on their business and personal lives.

Here are five key steps to get started:

1. Review business and personal cashflow

Managing higher rates and inflation calls for forward planning. Revisit business cashflow forecasts – and your household budget, to identify where costs can be trimmed without too much pain.

2. Know what you are paying

Now is the time to have a firm grasp of the rates you are paying on both commercial and personal finance. We often find business owners can’t pinpoint the interest rates they are paying, yet this is the starting point to know how your current financing arrangements shape up against the broader market.

3. Check if you can get a better deal

Many lenders reserve their best deals for new customers.

If you’ve had the same home loan for several years for example, it’s highly likely you could save by switching to a different lender. The same applies to commercial finance.

You could potentially save – even when rates are rising, by refinancing both commercial and personal loans.

4. Consider consolidating your finance

It can be stressful if you or your business are juggling multiple debts. Folding several loans including credit card balances, into a single debt can streamline your finances and your accounting systems, making cashflow management easier.

Consolidation can also deliver valuable savings if the newly consolidated loan comes with a lower overall rate.

5. Engage an expert

All business owners are pressed for time. But this should not prevent you getting the best possible deal on personal and business finance.

Calling in expert such as AAP Finance Brokers can help you explore new finance strategies you may not have considered – options that can lower costs and free up extra cash.

It can be the difference between just getting by and forging ahead.

As experts in both business and personal finance, the team at AAP Finance Brokers can do the legwork on your behalf arranging new lending choices.

We save you time – and with our knowledge of the lending market – we can save you money.

If you are seeking financing for your business or seeking advice on your business finance, call AAP Finance Brokers 1300 141 453.

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