- BDAILY PREMIUM -
The last 5 years have been nothing short of tumultuous for UK business owners. David Fort discusses some of the challenges businesses are facing today. From politics and the economy to recruitment and retention.
In today’s wider business environment, it can seem as though there’s another a challenge around each corner. But we’re seeing business owners across our region rise to the test. Whether it’s thinking outside of the box, investing in the future, or pushing the boundaries of their respective industries.
Outlined are some of the macro-environment factors currently at play. And ways in which owner managers can navigate their way forward.
With four Governments, a pandemic, differing support schemes and changing legislation, the impact of the political landscape over the last five years has been rife.
The devolved powers across various local authorities may have brought some respite. Giving financial autonomy to local governments who understand the needs, challenges and ambitions of businesses on a deeper level. But owner managers are now looking for some continuity to build back their confidence.
For many business owners, they’ve found it best to take measures into their own hands. Creating robust cashflow forecasts for strategic planning; working with their partners to futureproof their organisations and looking at ways to adapt and innovate in today’s political economy to help them thrive. So, while the political landscape will always have an impact on businesses, it doesn’t have to dictate the future course of your business.
The rising cost of living, energy and inflation
The economic climate continues to dominate headlines and headspace.
SMEs are now having to make decisions and run their businesses in a high inflation and high interest rates environment. As a generation we haven’t had to deal with anything like this.
While governmental support measures, like the Energy Bills Discount Scheme, are in place to help businesses tackle today’s economic climate, whether they go far enough is another question.
Again, we’re seeing owner managers take matters into their own hands. Some businesses we’ve spoken to have even gone as far as to build their own electricity generators. While this is an example on the far end of the spectrum, there are steps that owner managers can be taking to stand them in good stead for the future.
Taking the time and effort to invest in good management information and engage with trusted advisors, will help to make sure your business is agile, and making the right decisions based on strong insights.
Changes to the tax landscape
Corporation tax increase – If your business turns over more than £250,000, the Corporation Tax hike from 19% to 25% will have affected you. The increase has had a huge impact on cash flow, but it has also made the vast array of tax reliefs on offer, such as research and development tax relief (R&D), even more valuable, by offering a bigger break.
Changes to R&D tax relief - For starters, even though the Corporation Tax hike has made R&D more valuable, the enhanced deduction rate has fallen to 86% and the tax credit rate for SMEs has fallen from to 10% of tax losses.
The good news is that the scope of relief has expanded. It now includes cloud computing and pure mathematics. This modernises the regime in line with the current day requirements of innovating.
These are just a few of the changes to the regime. We’ve outlined the rest of the here. Current and prospective claimants need to be aware of these changes, as they could have a big impact on their claims going forward.
Capital gains tax (CGT) – We’re speaking to a lot of owner managers who are starting to plan ahead for their exit. If you’re looking to exit, you need to be mindful of the tax-free CGT exemption. This has fallen to £6,000 and then is lowering again to £3,000 next year. This will mean that thousands of more business owners will now be liable to the tax.
Make sure you consider all your exit options and don’t rush ahead just because of the CGT changes. Less conventional routes, such as employee ownership trusts, could be a viable alternative. But always ensure you speak to your advisors before changing or putting new plans in place.
One of the biggest challenges that business owners are facing is harnessing the best talent.
The social landscape changed. And so have the needs and wants of talented people across every industry. Post-pandemic, people have reevaluated their priorities and not just searching for the best salary.
Business owners need to be looking at what they can offer. From their benefits in kind, flexi-time contracts and agile working, to training opportunities, pathways to progression and incentives such as share schemes.
A good starting point is to collect anonymous feedback from your current team. See what you are already doing well and where you can improve. Acting upon these insights will show you’re listening to your team, and in turn this will help to boost engagement.
Joining the race to net zero
Sustainability is impossible ignore in this day and age. And the government’s ambitious target of reaching net zero by 2050 is fast approaching.
But with financial uncertainty, it’s not always possible to commit additional funding to the cause. With this in mind, joining communities like the SME climate hub maybe a more viable option. The hub offers offer tools and advice on taking action.
We’ve also outlined some ways in which businesses can strategically foster and fund sustainability within their business here.
Artificial intelligence, making tax digital and cloud accounting. There’s no doubt that the world is turning digital.
The opportunities that come with today’s technology are endless. From streamlining your business and boosting productivity, to aiding the process of innovation.
But it’s important to remember that the digital divide is still very much intact. For some, accessing the best of today’s technology is out of the question. And for others it requires a lot more time and effort to get to grips with the software at hand. This is usually demographic dependent, with age, location and income having an impact.
If you’re starting to implement new ways of working, which are dependent on today’s technology, it’s important to ensure all your team feel empowered to do their job with confidence.
It’s worth speaking with your current advisors to see if they offer training in software such as Xero or Sage. Or even researching courses which are available to you and your team in your local area, to help you make the most of today’s technology.
