Rising costs and the economic crisis are not something that businesses are immune to. But, while times are tough and purse strings are tight, the temptation to make cutbacks in the wrong places are likely to cause more harm than good.
With the clear strain that has been placed on SME businesses, thinking that the answer to cut costs can be found in relegating health and safety or ESG standards is not a quick fix… because what you don’t want is to leave yourself exposed to hazards, risks and lost opportunities to win more work.
The reality is that while it may seem a good idea, history tells us otherwise…
- An increase in workplace accidents, diseases and fatalities, as well as an increase in ill health from unemployment as a result of cutbacks during the global economic recession of 2007-2009, created by compromises in safety and health measures (ILO).
- Ethical and sustainable practices are rapidly become a ‘licence to trade’ to ensure compliance with changing legislation and avoid increasing fines for poor practices.
- Companies that invest through a crisis outperform peers during the recovery (McKinsey & Company).
If you lower your standards, the only impact you can expect see is the cost to human health, time, productivity, money and even your reputation.
So, with 61% of SafeContractor members telling Alcumus in our survey that their ambition in 2023 is to grow their business and 75% saying that will come from tendering from new work where ‘quality’ and ‘service’ are the key drivers that make them stand out against the competition (83%), here’s what you need to think about and what your clients will expect:
Maintaining compliant and ethical standards. This will give your clients peace of mind and demonstrate credibility, helping to retain clients and win more work, while you’ll be controlling your risks, protecting employees, saving time and money, protecting your reputation and safeguarding business continuity.
Your clients are also increasing their expectations of who they work with, faced with increasing pressure and stricter regulations for organisations to prove that their suppliers and contractors are working responsibly across the supply chain.
So, if you make short-term cutbacks, then you’re increasing the potential of fines for non-compliance or sub-standard working practices, increased risks and liability, negative financial consequences, lost business opportunities and reputational damage.
While the crisis is not going to be solved overnight, there are measures that will help you to create greater resilience.
- Update your cashflow forecasts – factor in things like more energy price increases, supplier price increases, corporation tax increases in April 2023 (from 19% to 25%).
- Keep control of your budgets – have complete visibility of your financials and track your spending.
- Increase your prices – the British Chambers of Commerce shows that 73% of businesses have raised prices in response to rising costs.
- Lower your expenses – look at your existing costs and identify areas that can be cut, or where cheaper alternatives can be sourced.
- Negotiate contracts where possible – use your existing network and find out if you can agree new terms for your business.
- Access new funding – if your business is viable and has good long-term growth prospects, there may be an option to raise finance.
- Adopt technology – which can help to increase efficiency, automate operations, increase productivity and reduce costs.
There is no magic wand to wave that will resolve rising costs and the financial upheaval that businesses are facing. But a recession is not an excuse to cut back on health, safety and ESG standards unless you’re prepared for the negative consequences that could end up costing your business a lot more in the future and have long-lasting implications.
Health and safety accreditation helps you prove that you mean business.
To find out more about SafeContractor call us on 02920 266242.