Ways to tackle fast-rising prices
- Maurine La Verge
- How to
- 31 Oct 2022
- 4 min
- Managing and growing
High inflation and rising energy and raw material prices are affecting many businesses. According to KVK research, almost 50% of businesses in the Netherlands have taken action. For example, 32% raised their prices. Some entrepreneurs even cut costs by cooperating. Besides measures you can take yourself, there are also government support schemes. Have your costs increased dramatically too? Read these tips from experts and other entrepreneurs to see what you can do.
KVK conducted an omnibus survey among 1,000 entrepreneurs in September 2022. More than 80% of those surveyed are dealing with rising costs. While many businesses have not yet recovered from the effects of previous coronavirus measures. Some indicated that they had already implemented price increases and cut costs in recent years, so now see few other options. Other entrepreneurs do see various ways to survive the rising costs. Learn more about 5 ways you can take direct action.
Video: Tips to tackle fast-rising prices
1. Raise your prices
André Jansen, the owner of Risico* Zonder Bemiddeling, increased his rates by 15% in August. “I personally called my regular customers to inform them about the increase. And I did that 1.5 months before I made the increase. All but one responded sympathetically.”
Business consultant Edwin Joosten of Bedrijfsmaat says: “Communication is always key. Be honest. The situation is what it is. If your costs go up, you run into problems, so you have to increase your hourly rate. Tell them that. If your client feels they are paying a fair price despite the price increase, they will be more likely to accept it.”
How to handle fixed contracts?
Tim van Santen specialises in contract law for legal services provider DAS. He explains what you can do if you work with fixed contracts. “In that case, raising prices is more difficult. First, check what is in the agreement. Sometimes there is a clause that lets you raise your prices under certain conditions. This can be difficult with consumers, who are usually better protected, but there are options here too. You can include in the general terms and conditions that you are authorised to implement a price increase. This is only possible if you stipulate that you can increase the price within 3 months of signing the contract. As a last resort, you can ask the court if you are allowed to increase your prices due to costs increasing.”
Shorter decision periods
Jos Braspenning of J. Braspenning Aannemers- en Timmerbedrijf introduced 2 more changes besides price increases. “The quotations I send are now only valid for a maximum of 6 weeks instead of 3 months. And the moment I get a confirmation from the client, I immediately commit to purchasing. Fortunately, I have enough equity to finance this. And I use an empty farmhouse for storage.”
2. Make savings
Of the entrepreneurs surveyed, 39% are focused on making savings. The types of savings include energy savings, looking critically at existing costs, working more efficiently, and sustainability.
Anyone who relies on a van to make repairs needs to be on the road. And your staff cannot sit out in the cold either. Bas van den Brenk, director of Klimaatroute, explains that you can still make smart savings on energy costs. “You can make changes today that are not complicated,” he says. Besides lowering the temperature and turning off lights when not needed, you can, for example:
- Adjust the central heating boiler to be more efficient.
- Adjust the climate conditions per room.
- Let staff work together in one room.
The measures below may need extra investment:
- Use radiator fans.
- Use a smart thermostat.
- Use LED lighting.
Look critically at your expenses and income
Gé Sletterink, a business adviser at KVK, tells entrepreneurs to look critically at expenses: “Do not just start cutting expenses. Determine which expenses help you achieve your profit. Make an overview so you can make good choices. Also, look at loans with high interest rates. If you can refinance a loan at a lower interest rate, you immediately save money. Finally, in addition to your business expenses, it is a good idea to limit your personal expenses as much as possible. This is called bootstrapping.”
Be more efficient and cost-effective
André Janssen tries to work mainly with customers in his region. “I invest a lot in my network here in the area. So I have many customers who live in the region. That saves me fuel costs.” Other entrepreneurs are also focused on being more efficient and cost-effective. In the survey, they mentioned several options, such as:
- Not renewing temporary employment contracts.
- Buy from cheaper suppliers.
- Collaborate with other entrepreneurs.
Be more sustainable
According to data from (CBS), 8 in 10 companies are looking at sustainability. For example, by buying solar panels. “By being more sustainable, you cut costs in the long term. Although that does not change much about the costs companies have just now,” says Van den Brenk. Do you want to become more sustainable in the long term? See if you can use government subsidies .
3. Make different choices
Almost 75% of entrepreneurs surveyed say they are making changes in their businesses in response to increased costs. These changes include adapting products and services, finding other premises, expanding their target group, and making more use of digital opportunities. Loes Konings-van Seggelen runs a cookware shop. Besides buying a more energy-efficient central heating boiler, she is updating her webstore. “I want to offer my customers extra service and let them see what stock I have in my shop via the website. Then customers will not have unnecessary travel and parking costs if they want to come to see a product in my shop.”
Some choices are easy and can be implemented quickly:
- Offer discounts for quicker payments.
- Encourage customers to pay in advance.
- Encourage customers to pay a deposit.
- Offer more service to attract higher-spending customers.
- Remove low-margin products from your range.
Other choices need more time and investment, such as:
4. Make use of help measures
Entrepreneurs who use a lot of energy can apply for the energy cost contribution scheme for energy-intensive SMEs (TEK). This temporary support is intended to give entrepreneurs some financial breathing space. And by making their business more sustainable or changing their business models, they will be able to handle higher energy costs in the future.
Does your business not qualify for the TEK scheme? Consider other schemes you can use:
- Check with your local municipality if they offer an energy allowance benefit.
- Check if you are entitled to other benefits (in Dutch).
- Check if you are eligible for financial support for (Bbz).
5. Find help
Piet van der Vooren, owner of the butcher's shop Slagerij Van der Vooren recommends seeking out other entrepreneurs. “Exchange information and ideas with each other. See if you can do things together. Knowledge is power. The more you know about each other, the more solutions will be available.”
Astrid Ponsioen-Pirets, a business adviser at KVK, also stresses the importance of getting help. “Never be ashamed of your problems. You are not the only one. Talk about your worries. Experts and people around you often see things differently, and therefore come up with different ideas. If you cannot pay your bills or if you are hesitant to continue your business, take action as soon as possible. This prevents problems from growing. And keep your accounts up to date so that you have a clear overview.”