In the past few months, the cost of living crisis has posed a serious financial threat for people and companies alike. According to a recent report published in This is Money, 70% of UK businesses say that rising costs are the biggest challenge facing them.
If you have business owner clients who are concerned about rising costs, here are five useful tips for how they can improve their company’s finances.
1. Build an accurate plan of incomings and outgoings
When it comes to making difficult decisions in a business, like cutting expenses, having accurate information is essential. That’s why, before your clients act, it’s important for them to have a clear understanding of their operating costs and which ones are rising.
At the same time, it can also be useful for them to have a clear picture of their business’s income streams, so they can work out whether a potential cut might affect them.
For example, if your client plans to reduce the number of staff, they may not have enough people left to meet their clients’ expectations, which could lead to lost business and reduced profits.
Once your clients know the full situation, they can highlight the areas that can be safely cut back on without it affecting their income.
2. Reassess the business’s expenses to save money
In any business, there are always a few unavoidable expenses, such as utilities and the cost of premises or raw materials. But even if your clients can’t cut them completely, they can still reduce them to a more manageable level.
Here it can be very useful to compare different service providers so your clients can see where they can make a saving. Of course, for some expenses like broadband, it’s important to find the best value for money without compromising on quality.
At the same time, you may want to highlight any services that your clients’ business pays for but doesn’t use. For example, cutting software subscriptions for programs that their team could realistically do without could be a useful source of savings.
If a service isn’t providing good value for money, cancelling it is often a sensible option.
3. Analyse staff structure to see if any roles can be merged
If they’re looking to streamline their business, it can also be helpful for your clients to review the structure of their teams to see if they need all their members of staff. After all, while employees are necessary for a business to grow, salaries are often one of the largest overheads for small companies.
If your client has decided that they want to reduce their business’s headcount, it can be helpful for them to look at their staff structure and see which roles can be amalgamated. Of course, it’s important to think carefully, as getting rid of too many employees can leave the rest overworked, which increases the risk of burnout.
Merging roles can help your clients to safely reduce their staffing costs while ensuring that their business can still meet its goals.
4. Review and update the business’s pricing model
Realistically, there are only so many cuts that your clients can make to their expenses before it starts to affect their business’s efficiency. That’s why, as well as reducing costs, it can also be helpful to increase their profits by updating their pricing model.
This can enable your clients to balance their books more effectively, giving them greater confidence that they’ll be able to ride out the difficult periods. While there is always some risk to increasing prices, it is often a necessity when unexpected issues cause variable costs to soar.
Of course, your clients shouldn’t be too afraid to make this change if needs be. After all, most customers know that they can’t expect the price of services to remain stagnant forever!
As long as your clients communicate quickly, clearly, and authentically about the necessity of the increase, they might be surprised at how understanding people can be.
5. Work with a financial planner
When it comes to running a business in the most effective way, there can be a lot to think about. That’s why your clients could really benefit from seeking professional advice.
For example, working with us might enable them to draw an income from their business more tax-efficiently. For example, this could be in the form of pension contributions. Not only could they personally benefit from tax relief on their contributions, but the payments are also typically tax-deductible for their business.
Alternatively, working with a planner can help your clients to fully protect their business against unexpected issues. Having the right type of cover for their company’s needs can enable them to overcome any bumps in the road that they might encounter, building their financial resilience at an uncertain time.
At a time when every penny is vital, working with a financial planner with wide experience of advising business owners can add real value.
Get in touch
Managing a business’s finances can be a real challenge, especially during difficult periods like the one we find ourselves in now. That’s why working with a financial planner can really benefit your clients, as we can offer valuable insight and advice to give them one less thing to worry about.
If you want to know more about how we can help, get in touch. Email firstname.lastname@example.org or contact us on 020 3828 8100.