A perfect combination storm has been created posing a huge risk to businesses in 2023. With rampant inflation, a recession around the corner and the cost of living increasing it is going to be a very challenging time, so now is the time to prepare and look into some money mentoring options to help your business survive and thrive. Consumers will have thousands of pounds less money in their pockets so all businesses bar those in the energy or supermarket sectors are likely to be affected with ecommerce, subscription services and hospitality businesses set to be the worst affected as they are classed as luxuries. So we’re going to look at a few ways on how you can prepare for next year to make sure your business survives and then thrives afterwards.
Plan Cost Cutting Measures
The chances are you will see a reduction in revenue in 2023 no matter what your sector is so being able to cut back on expenditure is essential to balancing the books. Now is the right time to start looking at where costs can be cut. This may involve getting your cleaner in one less day a week or getting rid of them altogether and doing it yourself, it may also involve either reducing the size of products, swapping for cheaper alternatives, finding cheaper premises, lowering your telecoms bills or unfortunately, laying off employees. These are decisions nobody wants to make but if you have an idea ahead of time how much could be saved in each area and which are the easiest and hardest to implement then you can act quickly.
One of the toughest areas for any business is cashflow so ensure you do detailed cashflow forecasts for different scenarios ahead of time, ensure you can pay all suppliers and creditors because if you don’t then you could end up going in to liquidation or needing a Company Voluntary Arrangement to survive.
Identify Potential Opportunities
As you will have noticed in the past, a lot of people make a lot of money during market crashes, financial crises and when housing bubbles burst. If you are in an industry where you could either temporarily or permanently pivot to take advantage of this it would be worth doing. If you have some cash reserves and want to roll the dice you could even enter a sector that will benefit from high interest rates.
Look After Your Personal Finances
Personal and company finances are interwound. In all likelihood you will be taking out a dividend each money which is tied to how much company makes, if you are living a certain lifestyle and all of a sudden your income drops, can you sustain it? Also, don’t forget you need to pay the tax man a year later, so even though you might be earning less you’ll still need to be able to pay more for last years tax year. Many people get in to debt with HMRC by falling foul of this and end up needing to apply for an IVA in order to be able to pay their debts back.