Well, it’s been a funny old year in the finance world hasn’t it?
Between the revolving door at Number 10, aftereffects of Covid lockdowns, energy prices rising and inflation soaring, it would be completely understandable if you wanted to bury your head in the sand and ignore the newspapers for a while. The dreaded ‘R’ word (Recession) has been thrown about a bit, so we thought we’d pull together some positive actions to help you plan ahead for whatever comes next.
There isn’t much that we can easily predict for the next few months, but as the new PM won’t be revising a budget until at least 17th November, we can at least guess that things will be a little uncertain for some time.
Here are our top tips for ensuring that your business can cope with the winds of change and to help you keep a steady ship!
Get Ahead Of Your Tax Bill
Obviously, we’re accountants (duh), so tax is always top of mind here. Our top tip for getting ahead is to make sure you get your outstanding sets of accounts done ASAP. This way you have prior warning about how much tax you’ll need to pay when your bill rolls around. If you can get your accounts done quickly after your year-end finishes, you’ll have plenty of time to ensure you have cash in the back for the bill. In short, don’t leave it until January 31st!
Keep Aside A Contingency Fund
Think about your business similarly to your personal finance. It’s a very good idea to always ensure that you have 3-6 months worth of expenses in the bank for a rainy day. Businesses that operate in this way can cope much better with sudden changes such as the Covid lockdowns. It will also give you a cushion if prices suddenly start increasing or an important piece of equipment breaks down.
Refinance Where Relevant
The number of SMEs in the UK with business debt has more than doubled since the start of the pandemic. Whilst debt can be helpful to steady cash flow or to fund growth, debt that has very high interest rates can prove a burden on your budget. Take stock of the current debt in your business, the interest rates and payment terms. Investigate finance products that could be a better fit for your needs and see if you can find a more competitive rate. Remember, if you’re more than two years into your business, the interest rates might be more favourable.
Cut Unnecessary Costs
This one is a bit of a no-brainer. Make sure you’re not spending on things that don’t add real value to your business or your staff. Look through any long-term contracts you have and set yourself a diary reminder for when you can re-negotiate them.
Do you find yourself burdened by frustrating admin work or getting caught up on the road? Think about the processes and structures that suck time out of your day and look for improvements. Can that 2-hour commute to a meeting be a half hour zoom call instead? This brings us nicely on to….
Implementing an eCommerce site, a strong CRM, automated systems or remote work can seriously revolutionise your business. It opens you up to new customers and usually reduces costs over time. It might be a bit of a hit upfront but often you can find options to pay monthly or via subscription.
Control Your Own Destiny
The absolute best thing about running your own business is that you are in control. If markets change you likely don’t have to ask anyone else’s permission to develop new ideas, launch a diversification strategy or a fancy new product. Innovation can help you stand out from the crowd in any situation, so make time for creative thinking or that idea you’ve had for ages but never got round to implementing. Perhaps now is the time!