The cost of living crisis is affecting small businesses nationwide. We’re here to help.
Unfortunately, not only have small businesses had to recently combat working during COVID-19 but at the end of last year, there was a new looming threat: rising inflation rates. By the time we reached the new financial year in April 2022, inflation had reached a record high of 9%, the highest in 40 years. And now, business owners are also having to deal with the cost of living crisis.
We work closely with small businesses across the UK to help them manage their books, and there is one thing for certain: this is a difficult and scary time for many. But there is still hope. Our experts have put their heads together and compiled a list of resources and strategies to help small businesses manage the cost of living crisis.
What are the key issues being faced by small businesses?
A big factor in all of the issues being raised are rising prices across the board, from energy to fuel, to council tax, everything is going up.
This also impacts customers and their spending, giving your less business. But also, material costs are on the rise, and many businesses are finding it hard to recruit new staff to fill essential job roles in a tight labour market.
All this also has a physical and mental impact on business owners too, as the stress and worry of weathering this storm take their toll on the body and psyche. According to a survey by Newspage, 14% of the surveyed small business and charity owners said that the cost of living crisis has been having “a very negative effect” on their mental health.
Who can help?
One of the avenues you can go down for help and support is the government. During the more recent spring budget, the government announced that it will be increasing Employment Allowance from £4’000 to £5’000 to tackle the growing rise in inflation. For smaller businesses, this means you will therefore be able to claim up to £5,000 off of your employer’s National Insurance Contributions (NICs) bills, which has seen an increase of just above one per cent back in April.
There were other small changes made by the government as well, as fuel duty was also cut by 5p per litre as a way to help combat the rise in petrol prices.
However, many small business owners feel that this was too small a change or gesture for the size of the crisis they are facing, and still feel the need to make other changes to their business.
What changes can you make?
As many already have, small business owners may have to make changes to adapt to the growing difficulties. Here are some viable options for changes to save money:
Use accounting software
A great way to save money whilst you are getting an idea of your current financial situation is by using accounting software like Xero and QuickBooks to help you keep track of your finances. Making the transition can be tricky, but due to the government’s ongoing plan for MTD (Making Tax Digital), it is becoming a necessary one.
And there are ways to get support on using them. Your local Rosemary Bookkeeper can offer discounts on accounting software like Xero and QuickBooks, help you use it, if you need it, and also provide tutorials on operations, like how to create an invoice on Xero.
If you are not already due to COVID-19, moving to remote work is a good option to save money during the cost of living crisis due to saving the cost of running an office space. And if you don’t want to lose out on your office space, there are flexible office space providers who offer hybrid solutions to providing a workspace. This all means you’re also not having to shell out further for extra running costs like office cleaners and are therefore offered a lot more financial flexibility.
Unfortunately, the rise in National Insurance rates and the national minimum wage may mean that keeping your current staff rates is not feasible. This does not mean that you have to make the undesirable choice to make redundancies, but you may be required to reduce staff hours or carry out reviews to better optimise productivity with your current staff levels.
Consider adjusting your prices
You may be able to make changes to things like your supply chain to make sure that you are saving money on the cost of your product orders for example. Or, rather than raise prices, you could apply optional service charges where you had not had one before. You may even choose to swap the products you use for cheaper alternatives.
Be more conservative by scaling back plans for growth
It is more viable in the current situation to be less optimistic about what may have been your prior growth plans for the year. By momentarily halting growth plans, you can conserve cash and increase your cash flow for when you need it.
In summary, this is going to continue to be a difficult time for many across the UK, and you may need to act to give yourself that little extra support.
At Rosemary Bookkeeping, we are experienced in supporting small businesses through thick and thin, and our financial experts can help offer you help when you need it most. Whether this is through helping you manage your books, or by giving you a helping hand in running online software, we are here for you.
To get in touch, find your nearest Rosemary Bookkeeping business today, or give us a call on 0345 862 0072.