Take Control of your Business Finances, 2021
From Covid-19 to Brexit, businesses have had an uphill battle of late. The impact of the pandemic throughout 2020, coupled with the uncertainty of Brexit, has left everyone facing many unprecedented challenges.
Now, as we start the new year, it’s time to take control of your business finances at this time of great upheaval. While the pandemic has led to another national lockdown, Britain has at last left the European Union, after the government negotiated an eleventh-hour trade deal.
Although no-one can foresee the end of the pandemic yet, the launch of vaccines at least gives businesses hope that there may be a light at the end of the tunnel. Leaving the EU on 1st January 2021 has stabilised the economy in one respect, although the impact of recent events on SMEs has still been considerable.
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How has coronavirus affected businesses?
Businesses have never begun a new year with so many concerns. COVID-related lockdowns have wreaked havoc on the economy, and this is set to continue into 2021. Some sectors have suffered more than others including hospitality, leisure, retail and live theatre. Many have had to adapt and continue as best they can, while unfortunately, others have succumbed to the downturn in trade.
During the first lockdown, surveys showed 30% of SMEs were totally reliant on the furlough scheme. The government money helped business owners to cover furloughed employees’ wages, plus National Insurance contributions and pensions.
In addition, Chancellor Rishi Sunak released a further £4 billion in grants for the hospitality, leisure and retail sectors and an additional £594 million for local councils to help businesses affected by the lockdown. Self-employed people whose income was affected were able to claim the Self-Employment Income Support Scheme grant.
Emergency coronavirus loans, with no repayments due for 12 months, such as Bounce Back Loans and Coronavirus Business Interruption Loans, were also launched in 2020.
While financial aid has undoubtedly enabled many businesses to survive, taking control of your business finances in 2021, and planning the way forward, has surely got to be the next step. This means reviewing 2020 to establish where things went awry and trying to devise a plan to get back on track.
How has Brexit impacted businesses?
Businesses in every industry have been affected by Brexit. The economy has struggled, due to the UK being unable to agree a trade deal with the EU until the last minute. This has led to reduced investment and recession. Sectors that trade internationally will see the greatest changes this year. Businesses whose suppliers are in continental Europe will have to navigate new legislation, while Brexit may bring a risk of increased costs and delays to the supply chain.
The positive news is that there will be quota-free and tariff-free access for products traded between Britain and the EU as a result of the trade deal, although the new customs procedures may add a layer of red tape.
The UK has been used to working to Europe-wide standards and it is likely this will continue, but Britain will no longer be active in shaping the policies behind the regulations. For many businesses in Britain, 2021 is still seen as a transition period as we adapt to the new regulations and working practices.
How has working remotely affected businesses?
Although working remotely in 2020 seemed inconvenient, it has enabled businesses to cut back on unnecessary expenditure in some ways. If most of your team is working from home, you will save money on utility bills, while your cleaning bills will reduce with no staff working onsite.
Most businesses provide a cafe or at least serve refreshments during meetings. These costs will also be eliminated if employees are working from home. In addition, business expenses, such as travel costs for employees, will be reduced significantly.
Working from home also reduces absenteeism, as the flexible schedule enables employees to better juggle work and personal obligations. Although it has been a challenging 12 months, it’s still important to focus on any positives to keep morale up.
How can you protect your money in 2021?
Businesses should now be focusing their attention on finances and devising an action plan for the year ahead. Although it might be a trying time, never bury your head in the sand!
Keep abreast of the latest information on financial aid from the government or your local authority. The gov.uk website is a good place to find details of any new aid packages that are being launched.
Then, work out your marketing strategy, using targeted social media advertising to save money. Even before the pandemic, having a presence on social media platforms was important. Now, it is crucial, as it’s a cost-effective way of reaching your target audience. It also gives customers the chance to interact with your posts, building trust in your brand.
Never make the mistake of reducing your marketing, as it’s a false economy. Simply adapt your strategy!
Is debt consolidation for you?
If you have studied your finances and conclude you simply don’t have enough income, especially during the current lockdown, it may be worth consolidating your debts.
Owing money to different suppliers, not being able to afford stock, struggling to pay business rent, or being unable to repair vital equipment, can be devastating, leading to emotional stress, as well as practical problems.
A consolidation loan could help your business get through these tough times in the short term, especially if you have no further government help available at present, and with the roll-out of the Covid-19 vaccine, you should soon be able to start taking back control of your finances to prepare for better times ahead.