Less splurging more sharing
Understanding current attitudes to risk will help you to position your products perfectly.
The pandemic has swept in a wave of caution and altered what we see as safe or risky, not just for our health, but also for our finances.
For many customers, certain investments and purchases are just not as attractive when the fluctuating economy translates to low job security. The end result? People are saving more and splurging less.
The drive to save more means we may see much more conservative spending patterns for a while yet, with less disposable income around for non-essential products. While this doesn’t spell the end of luxury brands, it does increase the desirability of affordable luxuries.
Funding what we need in a less risky way
In tough times, it’s wise to be wary about increasing liabilities. The reduced appetite for risk means that many businesses are rightly cautious about extending debt. Increasingly though, small businesses will look to establish new ventures and finance new purchases in a lean way and with lower debt.
For customers, the ongoing popularity of buy-now-pay-later services is allowing them to purchase conservatively and spread the outward flow of cash to suit their budget. A big rise in the uptake of subscription services is another way customers are reducing the upfront spend on the goods they want.
This trend towards conservative spending and innovative financing means that it’s more important than ever to think about how your products and services are positioned, and examine flexible and affordable ways for your customers to buy them.
Consider your customer
- How can you help your customer make purchases at lower risk or lower cost?
- If your customers feel the need for austerity, are your products best positioned as essentials or luxuries?
- Could your products or services be discounted as packages that are bundled or shared between couples or families?
Consider your business
- Could you combat low spending by partnering with other businesses to reach different customers?
- How can you fund new activities and investments in a leaner, more flexible way?
- Would shared models of asset ownership work for your business rather than automatically making new capital purchases the default option?
- Review your business lending and investment arrangements with an eye to risk, and seek professional advice about any changes you need to make.
- Aim for lean, low-cost methods of financing any new business activities: run a trial before committing big money towards new ideas.
- Consider how your brand is best positioned in the spectrum between necessity and luxury.
- Investigate offering customers flexible buy-now, pay-later payment options.
Notch Above Bookkeeping are Platinum Certified Xero bookkeepers and BAS Agents. We help small businesses across the east coast of Australia to prepare their BAS returns and streamline their bookkeeping processes, payroll and accounting records using cloud technology. Call us to find out how on 1300 015 130 today.