Harland Accountants’ Deborah Edwards has some timely advice for businesses struggling under the media hype of economic doom and gloom
Budgets come and go, grabbing the headlines, yet in their wake leave a trail of lasting effect that can have a huge impact on the success and failure of small businesses in Cornwall, particularly in the thing that matters most… cash flow.
An increase in National Insurance and a top end suppression of the basic rate tax band coupled with reduced corporation tax rates begs the question regarding the merits of incorporation.
Or is the increase in the personal allowance too big a carrot to stick to your sole trade or partnership? To the untrained eye, it can be difficult to know exactly what to do for the best.
At the beginning of April, we received confirmation that the National Minimum Wage was going up to £6.08 from October 2011 for over 21’s. OK, so this won’t affect this summer’s seasonal workers but it will hit the pocket next season with margins already being squashed from the top down by consumer pressure to spend less.
Combined with the media hype that causes us to panic and tighten our purse strings, it can be tempting to shut up shop altogether and buy that round the world ticket. So, what do I recommend?
Firstly, don’t panic! Plan in advance. Our local small businesses really are robust when it matters and have the flexibility to adapt to change quickly no matter what the market or the government throws at them.
It has been great to see many of our clients, whom we support with management accounts, actually bucking the trend because they are keeping a close eye on their figures. These businesses usually prepare detailed forecasts and can anticipate cash flow shortages or ad hoc expenditure. Be smart. Know your costs and know your margins and just as importantly, know that not every sale is worth your while.
Try to keep things local to stimulate the local economy and look to re-assess your supplier arrangements and negotiate in return for loyalty. Look at ways of doing things differently to attract new clientele. The phrase ‘if you always do what you’ve always done, you’ll always get what you’ve always got’ just doesn’t cut the mustard these days. Have a Plan B, if something isn’t working, be able to spot the signs and change tack.
Remember we’re all in this together. All our businesses are co-dependent on the existence and success of other businesses as suppliers and contractors. Unlike the Budget, we pride ourselves on delivering a partnership that goes beyond dipping in and out once or twice a year but creating a long lasting and supportive relationship with small businesses whom we are proud to call our clients.
To find out how we might be able to support your business call 08453 883 274 for an informal chat.
This article first appeared in the May 2011 issue of Business Cornwall magazine