We all know that the cost of living for both individuals and businesses continues to soar. The Bank of England hiked interest rates again last week taking the base rate to 4.5% and inflation remains high. So, whether you are a business owner or an individual you’ll be looking to do whatever you can to strengthen your financial footing.

The number of registered company insolvencies in March 2023 was 2,457, which was 16% higher than in the same month in the previous year. Understandably therefore, for many business owners, the focus is on survival more than ever. With that in mind, Ben Cowgill, Partner at Cowgills Business Recovery gives his thoughts and tips for surviving.

Realistic Forecasting

Realistic financial forecasting will give your business the best ability to navigate what the future might hold, while comparing actual performance with that predicted.

Don’t look through rose tinted glasses, when doing this – it’s better to be realistic and if anything, err on the side of caution.

Make sure that you know what your breakeven point is as this is an essential benchmark to help you understand what income the business must generate to meet its costs.

Improve efficiencies

Your breakeven point should be as low as possible. Achieving this requires cost cutting wherever possible. There are many ways for a business to reduce costs but of course these need to be considered alongside the overall needs of the business.

Some things you could consider are:

· Investigate cheaper providers of utilities such as gas, electricity, and water

· Look at what premiums and services you are automatically paying for and cancel any which are not necessary

· Don’t automatically assume that your bank is giving you the best deal, look around

Communicate

If you are in a situation where you owe creditors, then speak to them. Many businesses have been caught off guard by higher bills and the best first step to resolving an issue is often to take it head on. Speak with your creditors to ensure they don’t take sudden action as a result of not being aware of your circumstances and outline your plans to repay them.

If HMRC is your creditor, then there are options here. Time to pay arrangements are often available and arrangeable over the telephone. Your advisor would be able to help with this.

Customer service

Any business is only as good as the people who work there, your customers and how positive they feel. Marketing budgets might be tight at the moment so relying on word of mouth from your customers and staff could be important for your business.

Maybe invite a newspaper or a publication such as this to include a feature on your business.

Don’t confuse the company with yourself

If your business is cash strapped and you are finding yourself signing personal guarantees on behalf of the company, be mindful. Equally if your business is cash rich and you feel like taking some of those funds out, then beware that these are business funds not to be confused with your own and you could leave the business cash strapped and with an overdrawn directors loan account.

On a thoughtful note

If you are the founder of a business, then it can be difficult to differentiate between the business and yourself.

Think though, are you concerned about your wealth or your health? Do you want to grow a business or a family? Be mindful about your business and personal goals and think about how much your future self will thank you.

If you are worried that your business is in financial distress you should seek professional advice as soon as possible – early intervention is vital to survival. If you need Ben’s help please get in touch