Inflation rates are projected to reach highs of 4% before the end of this year. This could have a big impact if you own and run a small business. Here’s what you need to know:
British inflation has hit decade highs, caused by a combination of factors including COVID-19, Brexit, rising energy and fuel prices, higher costs of raw materials and goods in factories, and higher bills in restaurants and hotels. In October, the UK Office for National Statistics reported that inflation had hit 4.2%, a 1.1% increase from September – a significantly bigger increase than had been predicted by experts.
So what does this mean for small business owners?
Well, this could have a number of knock-on effects that small business owners should be aware of, including:
- A rising in costs of labour to compensate for increasing inflation
- Rising costs of products and services
- Labour shortages and supply chain issues
This will only be exacerbated by The Bank of England’s inconsistency on the topic of interest rate rises. As this is the mechanism used to control inflation, this will make more money more expensive to borrow – which would further reduce demand. This, in tandem with a fixed supply, means that price increases slow down, and businesses are faced with decision of whether or not to lower prices in order to maintain sales, or raise them to maintain profit (and risk losing customers).
So what can you do?
Unfortunately, the current situation leaves businesses with a dilemma and a bit of a no-win scenario. This will only change when either demand reduces or supply chains resume normal service. Meaning that, at present, the solution is in finding a balance between increasing costs and maintaining profits.
If you find the prospect of managing your finances in this difficult time daunting, why not contact Rosemary Bookkeeping? We can take care of your books for you and help you manage your finances. Hiring a professional bookkeeping service like Rosemary can greatly benefit you as we are able to help with tracking the cost and profit in your business.
Outsourcing your books to Rosemary also means:
- Your books are done regularly – so you can see what is going on in your business
- You don’t have to spend your valuable time doing the books – so you can do things more beneficial to your financial income
- Paying less than you would for an accountant
- You don’t need to hire any additional staff. You only pay for the work done
- You don’t have to do a job you loath
To outsource your books today, and receive financial advice from our experts, give us a call on 0345 862 0072, or find your nearest Rosemary Bookkeeping business here.