It’s Tough Out There…
For many, business is extremely tough at the moment. What started off as a downturn for hospitality, retail, leisure and construction is now spreading to their supply chains and beyond.
Business to consumer (B2C) organisations were already finding it difficult to pass on rising costs and energy bills to their customers who were themselves having to tighten their belts thanks to the cost of living crisis. The additional swathe of extra costs in April 2025, including increases to business rates for retail, hospitality and leisure, Employers National Insurance hikes and large increases to the National Minimum Wage, have proved a bridge too far for many small (and some large) businesses.
Youth unemployment is rising thanks to the high level of National Minimum Wage and changes to apprenticeship funding – all of which will no doubt have contributed to the high number of training providers that failed this summer.
The government is doing little to boost consumer or business confidence. With talk of further tax rises in the November budget, so many business owners and decision makers are sitting tight and putting expansion plans on hold until the changes (and the impact of these changes) is known.
There are several reasons for the latest downturn – the war in Ukraine, the US Trade Tariffs and Brexit to name but three. And it is of course part of the economic cycle that happens every 5 to 7 years. So, things will improve, it’s just a question of when.
As with any economic downturn, there will be opportunities for experienced entrepreneurs or well funded businesses to take advantage of opportunities that present themselves if they can act quickly.
If you’re finding things hard right now, here are some simple steps to take to ensure you thrive (and not just survive):
- Make sure your business is producing reliable, accurate and timely financial information and Key Performance Indicators (KPIs);
- Make sure your credit control systems and processes are watertight;
- Eliminate unnecessary expenditure and waste;
- Know the margins of all your products and services;
- Don’t make short term decisions you will regret in the future. Cutting training and / or marketing for example may result in short-term savings but could have grave implications in the medium-term;
- Don’t be afraid to increase prices and don’t join a race to the bottom;
- Produce cash flow forecasts, anticipate pinch points and obtain help / funding well in advance;
- There may be bargains around if demand for a product or service is reduced so shop around;
- Work with your accountant to minimise tax and see if any grants are available;
- Can Artificial Intelligence (AI) make any systems or processes more efficient;
- Don’t be afraid to make tough decisions;
- Bounce ideas off a trusted adviser, mentor or associate. When you’re busy fighting fires, it’s easy to miss obvious solutions; and most importantly
- Look after your health and wellbeing. Take regular breaks. Do things that enable you to switch off from the business. You’ll be much more productive and make better decisions if you’re healthy.
If you’d like to bounce some ideas off me or think you could benefit from a fresh pair of eyes looking at a business challenge you’re facing, please get in touch on 01482 427360 or andy@360accountants.co.uk
This blog was written by Andy Steele FCA FCCA – Founder 360, Chartered Accountants
